UBS on Sunday agreed to purchase Credit Suisse for 3 billion Swiss francs (approx. $3.2 billion) in a move to rescue the embattled Swiss bank.
The deal will result in every shareholder of Credit Suisse receiving one UBS share for every 22.48 Credit Suisse shares they held.
After the purchase, the combined bank will have $5 trillion of invested assets.
The deal was largely supported by the Swiss National Bank that pledged a loan of up to 100 billion Swiss francs ($108 billion) to support the takeover. More importantly, the central bank also granted a guarantee to assume losses up to 9 billion Swiss francs from certain assets over a preset threshold in order to reduce any risks for UBS.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss National Bank wrote in a statement.
The crisis of the Swiss bank came after it disclosed in the statement, saying that it found certain material weaknesses in its internal control over financial reporting, which related to the failure to design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements, including various flaws in internal control and communication.
The failure of the U.S. banking system last week fueled concerns of investors and customers of the Swiss bank.
