The country's central bank has opened a substantial line of liquidity in support of the business, as UBS, Switzerland's largest bank, has agreed to acquire Credit Suisse, according to the Swiss National Bank (SNB).
The SNB called the deal a solution to ensure financial stability and protect the Swiss economy in this exceptional situation. In a statement, the regulator noted that both banks have unrestricted access to existing facilities and can obtain a loan with privileged creditor status in the event of bankruptcy up to the value of CHF 100 billion.
The SNB can provide Credit Suisse with a liquidity assistance loan of up to CHF 100 billion, backed by a federal default guarantee. The regulator emphasized that the aid will ensure that UBS and Credit Suisse have the necessary liquidity available, while emphasizing that they continue to work closely with the Swiss federal government and the country's Financial Market Supervisory Authority to ensure the stability of the financial system.
Credit Suisse suffered significant losses this week as a result of the banking crisis affecting the United States, and after its main shareholder, the Saudi National Bank, announced that it would not inject any more money into the bank.
The Swiss central bank was forced to lend CHF 50 billion (about USD 53.6 billion) to Credit Suisse. However, the funding provided by the regulator did not stabilize the financial institution's stock price. The acquisition by UBS is expected to provide Credit Suisse with the stability it needs to weather the current crisis and emerge as a stronger financial institution.
The move is also expected to have a positive impact on the Swiss economy as a whole, which has been hit hard by the recent turmoil in the financial sector. The SNB's decision to open a substantial line of liquidity and backstop the loan to Credit Suisse underscores the regulator's commitment to ensuring the stability of the country's financial system and protecting the Swiss economy from the effects of global financial crises.
Swiss National Bank UBS Credit Suisse acquisition financial stability liquidity assistance loan federal default guarantee privileged creditor status bankruptcy regulatory support Saudi National Bank banking crisis global financial crises Swiss economy.
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