The European Central Bank (ECB) has welcomed the measures taken to take over the ailing Credit Suisse by rival UBS. ECB President Christine Lagarde stressed on Sunday evening that she welcomed the swift action and decisions of the Swiss authorities. "They are crucial for restoring orderly market conditions and ensuring financial stability."
According to Lagarde, the euro area banking sector is resilient and has a strong capital and liquidity base. "In any case, our policy toolbox is fully equipped to provide liquidity to the euro area financial system when needed and to ensure the smooth transmission of monetary policy," Lagarde stressed.
The head of the US Federal Reserve, Jerome Powell, and US Treasury Secretary Janet Yellen also speak in a joint statement of a step to support financial stability. The capital and liquidity of the US banking system is strong and the US financial system is resilient, it also said.
Loss of investor confidence
The Bank of England also welcomed the deal. The British banking system is well capitalised and financed and remains safe, the Bank of England explains. According to insiders, international players had urged Switzerland to act swiftly at Credit Suisse in recent days.
Colm Kelleher, Chairman of UBS Group, said: "This is a huge opportunity for us." The combination of the two banks strengthens UBS's position. According to UBS, the merger will create a company with more than $5 trillion in assets under management. It will further strengthen UBS's position as a leading global asset manager based in Switzerland.
The lurching major bank Credit Suisse had recently suffered from a considerable loss of investor confidence. The share price had fallen to a record low after the bank's largest investor ruled out providing further capital and the institution continued to struggle with cash outflows.
In the past fiscal year as a whole, Credit Suisse clients withdrew assets of around 123 billion Swiss francs. The stock market value of the traditional bank, founded in 1856, has fallen by around two-thirds in the past twelve months. In its heyday in the mid-noughties, the bank was worth more than 110 billion francs. Most recently, Credit Suisse was worth the equivalent of only 7.46 billion euros on the stock exchange, while UBS was worth the equivalent of around 60.8 billion euros.
The balance sheet total of UBS with more than 72,000 employees amounted to the equivalent of 2022 billion euros in 1030, while that of Credit Suisse with a good 50,000 employees amounted to the equivalent of 535.44 billion euros. UBS had generated a profit of 2022.7 billion dollars (currently 6.7 billion euros) in 07. Credit Suisse, on the other hand, posted a loss of 7.3 billion francs (7.4 billion euros).