Switzerland’s largest bank, UBS, is buying its rival Credit Suisse for $3.2 billion through an acquisition deal meant to protect the Swiss economy after panic erupted following the collapse of the U.S.-based Silicon Valley Bank (SVB) and Signature Bank earlier this month.

“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 said in a statement on its website on Sunday. The takeover of Credit Suisse was supported by the Swiss federal government, the Swiss Financial Market Supervisory Authority FINMA, and the Swiss National Bank.

The acquisition comes amid recent instability in global banking and fears about weak banks during a time where increasing interest rates has impacted the value of some financial assets, according to CNN.

Credit Suisse said earlier last week that it would borrow nearly $54 billion from the Swiss central bank in an attempt to address financial market fears that it could collapse like SVB and Signature Bank.

The logo of Swiss banking Credit Suisse on a building facade is seen on Sunday in Bern, Switzerland. UBS, Switzerland’s largest bank, is buying its rival Credit Suisse through an acquisition deal meant to protect the Swiss economy following the collapse of the U.S.-based Silicon Valley Bank (SVB) and Signature Bank earlier this month.
Photo by FABRICE COFFRINI/AFP via Getty Images

Swiss regulator FINMA and the Swiss National Bank offered financial support last week after a day of panicked trading. By Thursday, Credit Suisse said in a statement on its website that it would take the central bank up on its offer by borrowing 50 billion Swiss francs, or about $53.7 billion.

The move came after the bank’s shares plummeted on Wednesday as much as 31 percent, leading investors to panic that it would collapse under the weight of losses caused by a rapid rise in U.S. interest rates. The share prices dropped after officials from the Saudi National Bank, which holds around 10 percent of the bank’s stock, said it wouldn’t buy more shares to save the financial institution.

Global regulators have long deemed Credit Suisse systemically significant and too big to fail. Meanwhile, the Swiss investment bank had $574 billion in assets at the end of 2022 and around $1.7 trillion in its asset management business.

However, a history of financial scandal and market turmoil, created by the Federal Reserve’s aggressive campaign to raise interest rates to stamp out inflation, weakened the bank.

The Swiss National Bank said in its statement that Credit Suisse and UBS can take a liquidity assistance loan up to CHF 100 billion ($107.8 billion), with privileged creditor status in bankruptcy, based on the Federal Council’s Emergency Ordinance.

Swiss President Alain Berset said on Sunday, according to the Associated Press, that the takeover is “one of great breadth for the stability of international finance. An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”

In addition, Swiss Finance Minister Karin Keller-Sutter noted that it is regrettable that the bank, “which was once a model institution in Switzerland and part of our strong location” ended up being in this situation.

Newsweek reached out to the Swiss National Bank via email for comment.

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