Shares of UBS plunged on Monday (March 20) after Switzerland’s largest bank took over its troubled rival Credit Suisse for USD 3.25 billion. The takeover, aimed at preventing economic turmoil from spreading throughout the country and beyond, failed to calm market’s nerves. UBS shares fell as much as 12 per cent before clawing back to some extent.
Shares of Credit Suisse, for their part, opened almost 64 per cent lower, at just 0.68 Swiss francs per share, well below the UBS takeover price.
Watch | Credit Suisse shareholders take hit as UBS announces deal
Last week, Credit Suisse shares suffered a heavy fall on the stock market. On Friday, the share price closed at 1.86 Swiss francs. UBS said Credit Suisse shareholders would get 0.76 Swiss francs per share.
Credit Suisse’s share price has tumbled from 12.78 Swiss francs in February 2021 due to a string of scandals and crises that it has been unable to shake off.
Like UBS, Credit Suisse was one of 30 worldwide systemically important banks. This means that the bank was deemed of such vital importance to the global banking system that it was called “too big to fail.”
But the markets saw the bank as a weak link in the chain.
Amid fears of contagion after the collapse of two US banks, Credit Suisse’s share price plunged by more than 30 per cent last Wednesday to a record low of 1.55 Swiss francs, prompting the central bank to step in and offer a $54-billion lifeline.
But after recovering some ground Thursday, it saw its shares plunge again, prompting a weekend of frenzied negotiations before the Swiss government, central bank and regulator, along with the two banking giants announced the mega-takeover late Sunday.
(With inputs from agencies)
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