The risky bet makes the Swiss economy more dependent on a single lender
Following the 2008 financial crash, politicians pledged to never bail out banks again. The Credit Suisse rescue, orchestrated with public money, shows banks’ continued vulnerability and how their problems can quickly rebound on their home country.
UBS will pay $3.2 billion for 167-year-old Credit Suisse and assume at least $5.4 billion in losses from unwinding its portfolio of derivatives and other risky assets. Credit Suisse had a market value of about $8 billion at the close on Friday. The banks’ fortunes have diverged sharply over the past year. UBS earned $7.6 billion in profit in 2022, while Credit Suisse lost $7.9 billion. Credit Suisse’s shares were down 74% from a year ago, while UBS’s are relatively flat.Article content
UBS is also taking out a big competitor in securities trading. UBS earned $7.1 billion in revenue from buying and selling stocks, currencies and bonds. Credit Suisse posted about$3.2 billion last year.Article contentCredit Suisse’s demise has been a blow to Switzerland’s reputation for banking and sent shockwaves through global finance.
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