Credit Suisse deal halted crisis, Swiss national bank says

Swiss authorities urged UBS to take over its smaller rival after the central bank's plan for Credit Suisse to borrow up to 50 billion francs (USD 54 billion) last week failed to reassure investors and customers.

FILE PHOTO: Logos of Swiss banks UBS and Credit Suisse are seen in Zurich, Switzerland March 20, 2023. REUTERS/Denis Balibouse/File Photo

The Swiss central bank hiked its key interest rate on Thursday and insisted that a government-orchestrated takeover of troubled Credit Suisse by rival bank UBS ended the financial turmoil.

In a statement, the Swiss National Bank said it’s providing large amounts of support in Swiss francs and foreign currencies and that the Sunday announcement by the federal government, financial regulators and the central bank “put a halt to the crisis”.

The hastily arranged, USD 3.25 billion deal aimed to stem the turmoil in the global financial system after the collapse of two US banks and jitters about long-running troubles at Credit Suisse led shares of Switzerland’s second-largest bank to tank and customers to pull deposits.

Story continues below this ad

Swiss authorities urged UBS to take over its smaller rival after the central bank’s plan for Credit Suisse to borrow up to 50 billion francs (USD 54 billion) last week failed to reassure investors and customers.

To support the deal, the Swiss central bank says it’s providing a loan of up to 100 billion francs and the government is providing another 100 billion francs of support as a backstop if needed.

“An insolvency of Credit Suisse would have had severe consequences for national and international financial stability and for the Swiss economy,” said Thomas Jordan, chairman of the Swiss central bank’s governing board.

The central bank hiked its key interest rate by half a percentage point to counter “renewed increase” in inflation, which rose since the beginning of the year, to 3.4 per cent last month.

Story continues below this ad

It follows a quarter-point rate hike by the US Federal Reserve on Wednesday and expectations of a rise by the Bank of England on Thursday. The European Central Bank also hiked by a half-point last week, with the ECB and Fed chiefs looking to assure people that the financial system is stable.

Once an MP, rape-convict Prajwal Revanna is now a clerk at prison library

Cities6 hr ago

Former JD(S) MP Prajwal Revanna, grandson of former PM H D Deve Gowda, has been assigned clerical duties at Parappana Agrahara Central Prison after receiving a life sentence for rape. He earns Rs 520 per day and faces multiple charges stemming from four cases, with evidence including videos of the assaults recorded on his phone. He was found guilty in one case and still faces trial in the others.

View all shorts

Live Blog