Stock markets opened on Monday following the announcement of the takeover of embattled Swiss lender Credit Suisse on Sunday by UBS and Swiss National Bank.
The buyout for 3 billion Swiss francs ($3.23 billion, €3.04 billion) was agreed after weekend talks that ran into Sunday evening, finalizing just ahead of financial markets’ Monday openings in New Zealand, Australia and eastern Asia.
The rescue of Credit Suisse has shaken Switzerland, a country that has built its reputation around being a safe banking and financial hub.
Shares in the embattled lending giant were down over 60% in Zurich on Monday morning, dipping below the price paid by UBS, whose own share price fell 8.77%.
Stock markets across the world were down on Monday, with Hong Kong’s main index falling 3% while German and French benchmark indexes both down more than 1% as markets opened.
EU measures to protect banks ‘have worked’
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France: Banking woes ‘don’t concern’ EU
France’s central bank head Francois Villeroy de Galhau said on Monday, in an interview for France Inter radio, that Credit Suisse’s woes and the volatility in the US banking system “don’t concern French and European banks.”
Villeroy, who is also a member of the European Central Bank (ECB), also praised USB for the takeover, saying: “They have diversified business models, which are profitable. They have strong risk controls and, above all, they have very important levels of liquidity and capital.”
As part of the deal, Swiss authorities directed the write-off of high risk bonds worth a total of 16 billion Swiss francs. The so-called addition tier 1 (AT1) bonds were created after the 2008 financial crisis to put losses from high-risk investments on the investors rather than tax payers.
Germany’s largest bank Deutsch Bank responded to the news saying that its exposure to AT1 bonds was “near zero.”
Meanwhile, Asian equities fell on Monday despite the news of the UBS takeover of Credit Suisse and hot on the heels of a sell-off in New York amid fears of a financial sector collapse.
Tokyo shares were down after Monday’s trading, with the benchmark Nikkei 225 index falling 1.42%, or 388.12 points.
ab/es (Reuters, AFP, dpa)
Article source: https://www.dw.com/en/markets-react-to-last-minute-credit-suisse-takeover/a-65045187?maca=en-rss-en-all-1573-rdf