UBS Agrees to Buy Credit Suisse for $3.25B; SNB Offers CHF 100B Liquidity Backstop

UBS has agreed to acquire Credit Suisse for CHF 3 billion ($3.25 billion) in an all-share deal backstopped by numerous guarantees and liquidity provisions by the Swiss government. The deal aims to contain the shock that’s roiled the global banking system over the past week.

All Credit Suisse shareholders will receive 1 share in UBS for 22.48 shares in Credit Suisse, equivalent to CHF 0.76 per share.

Moreover, Credit Suisse’s entire Additional Tier One Capital (AT1), or roughly CHF 16 billion of contingent convertible bonds, will be bailed in and written down to zero

The purchase price is a fraction of the $8 billion market cap the company was valued at on Friday’s close.

The Swiss National Bank (SNB) is offering a CHF 100 billion liquidity assistance to UBS while the government is granting a CHF 9 billion guarantee for potential losses from assets UBS is taking over.

The plan was drawn up quickly after the collapses of Silicon Valley Bank and Signature Bank triggered a rout in Credit Suisse’s stock and bonds. The SNB’s $54 billion pledge to provide sufficient liquidity announced Friday to Credit Suisse failed to assuage investor’s fears over the bank’s prospects.

Using UBS to save Credit Suisse marks a turnaround from nearly 15 years ago, when Switzerland bailed out UBS after it got stuck with billions of toxic assets in its US business. Credit Suisse declined state aid at the time and emerged from the crisis in stronger shape.