Swiss Bank UBS agrees to bailout crisis-hit Credit Suisse

The Swiss National Bank said that UBS would be taking over embattled lender Credit Suisse. The announcement came after a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators. The Swiss National Bank said, the deal was the best way to restore the confidence of financial markets and to manage risks to the economy. Swiss President Alain Berset said that the Swiss Federal Council welcomed the takeover as it was the best solution to restore and strengthen market confidence in Credit Suisse and the Swiss financial center. Credit Suisse said in a statement that UBS would take it over for "a merger consideration of three billion Swiss francs ($3.25 billion)", with Credit Suisse shareholders receiving one UBS share for 22.48 Credit Suisse shares.

The wealthy Alpine nation is famed for its banking prominence and Berset said the takeover was the "best solution for restoring the confidence that has been lacking in the financial markets recently". If Credit Suisse went into freefall, it would have had "incalculable consequences for the country and for international financial stability", he said. However, the Swiss Government and banking officials had been locked in urgent talks to rescue the embattled lender, which was given a 54 billion dollar lifeline by the country's central bank this week. Swiss Finance Minister Karin Keller-Sutter said that the government in Bern had agreed to provide guarantees of up to 9 billion Swiss francs to underwrite the takeover.

The deal was warmly received internationally, with European Central Bank chief Christine Lagarde welcoming the "swift action".The decisions taken in Bern "are instrumental for restoring orderly market conditions and ensuring financial stability. The euro area banking sector is resilient, with strong capital and liquidity positions", she said. However, The US Federal Reserve and other central banks also sought to ease fears through a coordinated effort to increase liquidity in the banking sector. The British, Canadian, Swiss, and EU central banks are reportedly involved in the effort to step up access to dollars in swap line operations.