UBS and BlackRock race to buy Credit Suisse to end banking panic

UBS and BlackRock race to buy Credit Suisse to end banking panic

BarcelonaDespite the 50,000 Swiss franc loan that Credit Suisse received from the Swiss Central Bank (SNB) to strengthen its liquidity after losing much of its value on the stock market during the week, distrust of the Swiss institution remains . As explained by Financial Timesthe country’s largest bank, UBS, is negotiating the purchase of its direct competitor, Credit Suisse, to curb the banking panic.

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Although this would be the preferred option for the Swiss National Bank, which is pushing for the two entities to merge and thus restore the confidence of the financial system, UBS has a competitor: BlackRock. The world’s top fund manager aims to beat UBS’s bid to stay with Credit Suisse, also according to the FT.

The decision, however, should be made over the weekend, before the markets reopen on Monday morning. According to the British paper, the boards of UBS and Credit Suisse will meet over the weekend to discuss the deal, which is being closely watched by the Swiss National Bank and markets watchdog Finma. At the same time, BlackRock would have already communicated its intentions to Credit Suisse and the result could end up being a partial or full transaction.

However, after this information became known, BlackRock has denied its interest in acquiring Credit Suisse “in whole or in part”, despite having been one of the main investment banking clients of the Swiss entity.

Black week in banking

Banking is having a dark week. It all started when Silicon Valley Bank, the twentieth largest bank in the United States, and two small entities in the same country went bankrupt last week due to problems stemming from their mismanagement in the face of rising rates. They failed to adjust their long-term bond investments to rising rates, which left them with a hole in their assets. In addition, they saw many of the customers making massive withdrawals seeking higher returns on their deposits. All this caused mistrust to spread among depositors, which led to a rapid outflow of liquidity that brought down the banks.

To prevent any kind of contagion, the US authorities intervened in the banks and guaranteed the entire deposits of customers, going beyond the legal limit of 250,000 dollars that exists in the country. After the fall of the stock markets on Monday, the markets already bounced back on Tuesday and the situation seemed to be under control.

But the panic with Credit Suisse followed fears of contagion from Silicon Valley Bank’s problems. It all started with some untimely statements – especially at the time they came – from Ammar al-Khudairy, president of the Saudi National Bank, which is Credit Suisse’s main shareholder. The financier said they would not make further injections of money into Credit Suisse, which sent the bank, the rest of the sector on a European scale and markets around the world crashing.

It should be borne in mind that Credit Suisse was dragging years of bad management problems. In addition, the exposure of banks from other countries to the Swiss entity is small.


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