The Treasury Secretary USJanet Yellen, and the president of the Federal Reserve (Fed), Jerome Powell, celebrated this Sunday the support given by the Swiss Confederation to the purchase of the Credit Suisse bank by UBS.
“We welcome the announcements made today by the Swiss authorities in support of financial stability,” they said in a joint statement.
This week we have seen deposit outflows stabilize, and in some cases reverse, within most small and medium-sized banks. The swift and decisive actions taken by @SecYellen and regulators have helped restore confidence in our banking system, and depositors should feel secure. pic.twitter.com/KOgamofF62
—Deputy Secretary Wally Adeyemo (@TreasuryDepSec) March 17, 2023
Swiss Finance Minister Karin Keller-Sutter had stated that her government will provide a guarantee equivalent to more than 9 billion euros to reduce the risks that UBS bank incurs by absorbing Credit Suisse.
According to efeKeller-Sutter justified this measure alleging that the bankruptcy of Credit Suisse “would have had irreparable consequences” not only for Switzerland, but for banks in the rest of the world, and that for this reason they assume responsibilities “that go beyond” their own borders.
Credit Suisse was the first casualty outside the United States of the banking crisis that erupted last week. Yellen and Powell reiterated, however, the strength of the US banking system.
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UBS agreed to buy ailing rival Credit Suisse thanks to support from the Swiss federal government, the Swiss Financial Market Supervisory Authority and the Swiss National Bank, according to statements, the company said. CNN in a report.
Credit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis, according to this source.
But confidence collapsed last week after he acknowledged “material weakness” in his accounting amid the collapse of Silicon Valley Bank and Signature Bank, raising fears in weaker institutions at a time when high interest rates have undermined the value of some financial assets.
Credit Suisse Group announces it has entered into a merger agreement with UBS. All details available here: https://t.co/IkG4X3wze5 pic.twitter.com/3Obz6zpxSC
— Credit Suisse (@CreditSuisse) March 19, 2023
Dating back to 1856, Credit Suisse traces its roots to the Schweizerische Kreditanstalt, which was created to finance the expansion of the railway network and the industrialization of Switzerland.
In addition to being the second largest bank in Switzerland, it looks after the wealth of many of the world’s richest people and offers global investment banking services. It had more than 50,000 employees at the end of 2022, according to the US chain.
With information from EFE and CNN.
