UBS seals deal to acquire Credit Suisse; Swiss regulators to provide $108 billion liquidity assistance

Swiss authorities have announced that UBS has reached an agreement to acquire Credit Suisse in an effort to prevent further market disruptions in the global banking sector. The move comes as Swiss regulators aim to prevent a crisis of confidence in Credit Suisse from spilling over into the broader financial system, with the finance minister warning that a bankruptcy of a globally important bank could have irreparable consequences for financial markets.

The Swiss central bank has stated that it will provide substantial liquidity to the merged bank, with 100 billion Swiss francs ($108 billion) in liquidity assistance allocated for UBS and Credit Suisse. While the deal value has not yet been disclosed, a report from the Financial Times suggests that it exceeds $2 billion.

"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 central bank said.

Swiss Financial Market Supervisory Authority (FINMA) has assured that all business activities of both banks can continue with no restrictions or interruptions. It has also confirmed that it will coordinate with national and international authorities, including the US Federal Reserve and the British Prudential Regulation Authority.

Credit Suisse has been under intense scrutiny in recent times, with a brutal week leading to the second and third-largest US bank failures in history. As one of 30 global banks regarded as systemically important, a deal for Credit Suisse could have far-reaching implications for global financial markets.

While the weekend negotiations are seen as a positive step, it remains to be seen if the deal is sufficient to restore trust in lenders around the world. The fallout from the crisis of confidence in Credit Suisse and the failure of the two US banks could ripple through the financial system this week, according to two senior executives with knowledge of the discussions.

Credit Suisse shares lost a quarter of their value last week and the bank was forced to tap $54 billion in central bank funding to stabilize its balance sheet. Swiss authorities are also reportedly examining imposing losses on Credit Suisse bondholders as part of the bank's rescue plan. However, European regulators are hesitant about such a move, fearing that it could impact investor confidence elsewhere in Europe's financial sector.

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