UBS Takes Over Credit Suisse

Author: Connor Campbell - Bullion & Economics Editor

Published: 20 Mar 2023

Last Updated: 20 Mar 2023


The UBS-Credit Suisse merger, orchestrated by Swiss regulators, has been praised as a coordinated global response to turmoil in the financial market.

In this blog post, we will explore the implications of this takeover on the global financial market, the UK banking system, and oil stocks. We will also look at the factors that led to the collapse of Silicon Valley Bank and Signature Bank and the impact of the UBS-Credit Suisse merger on these issues.

Key Takeaways

  • UBS announced that it will buy it's rival Credit Suisse for 3 billion Swiss francs.
  • UBS said it expected annual cost savings of $7 billion by 2027
  • FTSE and FTSE 250 plunged as much as 6.2%
  • Credit Suisse - share price plummets by 60%
  • Oil prices have sunk to their lowest level in 2 years
  • 3.1% towards $70 barrel and European gas prices have fallen below $40 per megawatt hour for the first time since August 2021

What Do We Know About the UBS-Credit Suisse Merger

The recent tumult in the global financial market, precipitated by the collapse of two prominent American banks, Silicon Valley Bank and Signature Bank, has prompted Swiss regulators to facilitate a deal between UBS and Credit Suisse. This rapid merger, masterminded by Swiss authorities, has garnered praise from central bankers worldwide as a decisive measure to reinstate tranquillity.

The Global Reaction to Financial Market Turbulence

The disintegration of Silicon Valley Bank and Signature Bank, two significant American financial institutions, has sent shockwaves throughout the global financial landscape. In order to avert a crisis of confidence in Credit Suisse from reverberating across the broader financial sphere, Swiss regulators intervened, brokering a deal between UBS and Credit Suisse. This expeditious merger, steered by Swiss authorities, has garnered commendation from central bankers around the world as a crucial step towards restoring stability.

Implications of the UBS-Credit Suisse Merger

The UBS-Credit Suisse merger harbours far-reaching consequences for the UK banking system and the FTSE 100. Although the Bank of England lauds the Swiss authorities' efforts in brokering the takeover, FTSE 100 banking stocks have taken a nosedive in the wake of this unprecedented state-backed intervention. Furthermore, the merger may trigger a wave of consolidation within the UK banking sector, as other financial institutions strive to augment their market share and compete with the newly established UBS-Credit Suisse conglomerate. This could result in heightened competition and a reformation of the UK banking landscape.

The downfall of Silicon Valley Bank and Signature Bank has been a principal catalyst for the recent upheaval in the global financial market. The collapse of these major US banks has incited fears of contagion and placed pressure on other financial institutions to bolster their balance sheets. The UBS-Credit Suisse merger may serve as a crucial factor in restoring confidence in the global financial market and averting further contagion. The merger represents a concerted international response to the crisis, with the European Central Bank promising support to eurozone banks through loans if required.

Lowest Oil Prices in 2 Years

The UBS-Credit Suisse merger has also influenced oil stocks, which have dipped in the wake of the merger announcement. Heightened investor concerns regarding the global banking crisis have diminished the appetite for riskier assets, such as commodities. Brent crude, the international benchmark, has experienced a slump of up to 3.1% towards $70 a barrel, a level unseen since March 2021. European gas prices have also fallen below $40 per megawatt-hour for the first time since August 2021, as the banking crisis converges with the end of winter demand.

Understanding the UBS-Credit Suisse Merger 

The UBS-Credit Suisse merger constitutes a major development in the global financial market, with its effects likely to be felt for years to come. The merger symbolises a coordinated global response to the crisis, with central banks worldwide pledging their support for the banking sector. However, the merger is not without risks, and concerns persist that it may lead to further consolidation within the banking sector and increased competition. Prudent investors must remain vigilant and closely monitor developments in the global financial market in the ensuing months to stay ahead of the curve.

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