UK regulators back merger of banking giants Credit Suisse and UBS | Business News

British banking watchdogs have backed Switzerland’s UBS takeover of Credit Suisse, as financial regulators around the world race to avert the industry’s biggest crisis since 2008. .

Sky News understands that Bank of England indicated to its international partners and UBS that they would support urgent transactions, something both European banking giants wanted to announce later on Sunday.

Credit Suisse has been pushed to the brink of financial disaster though secured a line of credit of $54 billion (£44 billion) from Switzerland’s central bank a few days ago.

The move, designed to reassure markets and depositors, did not stem the tide of massive customer withdrawals, prompting the Swiss government to ask UBS to explore a takeover of its historic rival. me last weekend.

Jeremy HuntThe prime minister and Andrew Bailey, governor of the Bank of England, are being briefed on developments regarding the most significant global bank merger since the financial crisis 15 years ago.

Although Credit Suisse has a market capitalization of just $8bn (£6.6bn) – down from almost $100bn (£82bn) in 2007 – concerns about its future have sent shockwaves through financial markets around the world.

Its vast investment bank balance sheet is said to represent a stumbling block in negotiations with UBS, and the exact structure of a deal remained unclear as of Sunday morning.

UBS’s board, led by former Morgan Stanley chief executive Colm Kelleher, is said to have been reluctant to explore a deal with its fellow Swiss bank, which had been forced to raise capital after hefty fines and restructuring fees.

City sources said authorities in the United States pressed the Swiss government to push for a resolution to the crisis over the course of this weekend.

Reports suggest that UBS wants the Swiss government to provide a multibillion-dollar bailout to insure the bank against losses arising from the takeover of its smaller rival.

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The current turmoil in the global banking sector stems from the collapse of Silicon Valley Bank in the US earlier this month.

Its UK branch is rescued by HSBC for £1but several other mid-sized US lenders have also been forced to seek emergency funding.

Hope the takeover will stop the spread

Still, there is hope that the Credit Suisse takeover will stem the kind of contagion that evokes a genuine comparison to the crisis of 2008, when banks including Bear Stearns and Lehman Brothers collapsed.

Credit Suisse employs around 5,000 people in the UK, making it one of the largest investment banking employers in the City.

The Bank of England declined to comment on Sunday, while Credit Suisse and UBS have been contacted for comment.


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