Above all, do not panic. In a joint statement with the European Bank Resolution Mechanism (SRB) and the European Banking Authority (EBA) published on Monday, the European Central Bank was keen to ensure that "the European banking sector is resilient, with strong levels of capital and liquidity". These statements come a day after the announcement of the emergency acquisition of Credit Suisse by UBS, greeted with skepticism by the markets.

The institution "welcomed all the measures taken by the Swiss authorities to ensure financial stability", after the announcement on Sunday of the acquisition of Credit Suisse by its rival UBS. However, she quietly criticized Switzerland's decision to favour shareholders over holders of so-called Tier 1 additional risk bonds.

European stock markets in the red this morning

In the euro zone, equity holders "would be the first to absorb losses and it is only after their full use that Additional Tier 1 would be harmed," the ECB said. "This approach has been applied consistently in the past and will continue to guide the banking supervision actions of the SRB and the ECB in crisis interventions," she added. "Additional Tier 1s are and will remain an essential component of the structure of European banks," the ECB said.

After intense negotiations, UBS agreed on Sunday to buy its troubled rival Credit Suisse for a pittance, with large guarantees from the government of Bern and liquidity from the SNB, the country's central bank.



But this purchase plunged the securities of bank shares Monday morning on European stock markets, investors fearing a destabilization of the banking system.

The operation will cause holders of so-called Tier 16 Incremental Tier 1 bonds to lose <> billion Swiss francs, on which the Swiss authorities have decided to place part of the financial burden of the operation. An extraordinary decision while the holders of these securities normally arrive before the shareholders in the order of priority of repayment in case of bankruptcy.

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