Swiss banking giant UBS said Sunday it will buy its embattled rival Credit Suisse in a government-brokered rescue deal worth 3 billion Swiss francs ($3.2 billion) aimed at calming financial market jitters triggered by the collapse of two U.S. regional banks.
Negotiations for the acquisition were initiated by the Swiss government and the Swiss National Bank, while six of the world's central banks, including the U.S. Federal Reserve, the European Central Bank and the Bank of Japan, announced a coordinated effort to enhance global dollar liquidity to calm financial markets.
The Swiss central bank pledged a loan of up to 100 billion francs, while the government, which exercised emergency powers to support the merger without requiring the approval of shareholders, will provide a loan loss guarantee of up to 9 billion francs.
Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares, equivalent to 0.76 francs per share.
UBS reportedly raised its offer from the originally proposed $1 billion, but the takeover value is still less than half of Credit Suisse's market capitalization on Friday.
The Swiss government scrambled to broker the deal before financial markets reopened on Monday after the collapse of Silicon Valley Bank and New York-based Signature Bank created significant financial instability.
Credit Suisse suffered huge losses in 2021 in its investment dealings with U.S. hedge fund Archegos Capital Management, reporting a net loss in 2022 and warning of further setbacks in 2023.
The six central banks currently offering U.S. dollar liquidity functions agreed to increase the frequency of seven-day maturity operations from weekly to daily, according to the Bank of Japan.