ALBAWABA — UBS Group AG on Sunday agreed to a historic, government-brokered deal to take over its troubled Swiss rival Credit Suisse Group AG, the president of Switzerland announced at a press conference in Bern on Sunday.
Swiss President Alain Berset, speaking alongside UBS chairman Colm Kelleher and his Credit Suisse counterpart Axel Lehmann, said the government was confident that the takeover was the "best solution" for "restoring confidence that has been lacking the financial markets recently".
The central bank chief, Swiss National Bank chairman Thomas Jordan, and Marlene Amstad, head of the financial regulator FINMA, were also present.
The $3.24 billion deal, over triple the initial offer, is to be an all share deal, priced at a fraction of Credit Suisse’s $8.7 billion close on Friday, is aimed at containing a crisis of confidence that threatened to spread across global financial markets.
The Financial Times reported that the Swiss National Bank agreed to offer a $100 billion liquidity line to UBS as part of the deal and that Swiss authorities are poised to change the country’s laws to bypass a shareholder vote.
At the press conference Finance Minister Karin Keller-Sutter said that Credit Suisse bankruptcy could have caused "irreparable economic turmoil".
Authorities urged UBS to get work out a deal before the stock exchange reopens at 0800 GMT on Monday, in a bid to reassure investors and avoid a wave of contagious panic on the markets.
UBS and Credit Suisse are both among the 30 banks around the world deemed to be Global Systemically Important Banks, being of such importance to the international banking system that they are considered too big to fail.
"All shareholders of Credit Suisse will receive one share in UBS for 22.48 shares in Credit Suisse as merger consideration. This exchange ratio reflects a merger consideration of three billion Swiss francs for all shares in Credit Suisse," the troubled bank said, with Lehmann adding: "Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome."
The SonntagsZeitung newspaper called it "the merger of the century", adding "the unthinkable becomes true: Credit Suisse is about to be taken over by UBS".