Chinanews.com, March 3 (Zhongxin Finance Peng Jingru) Recently, the news of UBS's acquisition of Credit Suisse made all parties exclaim "witness history".
On March 3, local time, UBS Group (hereinafter referred to as "UBS"), Switzerland's largest financial institution, announced that it would acquire Credit Suisse ("Credit Suisse"), Switzerland's second largest financial institution, for 19 billion Swiss dollars. The deal would create a "Big Mac" company with more than $30 trillion in investment assets.
Screenshot of UBS UBS China official website.
The century-old "super bank" left the market sadly, attracting the attention of many countries
"Credit Suisse has already made several relatively large investment mistakes, causing the stock price to fall sharply, and the market value has fallen below $70 billion, which is already lower than Luckin Coffee." Yang Delong, chief economist and fund manager of Qianhai Open Source Fund, told Zhongxin Finance.
In February, Credit Suisse announced a net loss of CHF 2.2022 billion for 73, the second consecutive year of net loss. On March 3, Credit Suisse released a report saying the bank's internal controls over financial reporting had "significant deficiencies."
At a press conference held on the 19th, the Swiss federal government said that in the face of the current difficult situation, UBS's acquisition of Credit Suisse is the best solution to restore the confidence that the financial market has recently lacked, and it is also the best solution to manage the risks faced by Switzerland and its citizens.
Credit Suisse was founded in 1856, 167 years ago. Credit Suisse was one of the few financial institutions that suffered fewer losses during the 2008 subprime mortgage crisis. At the same time, Credit Suisse ranks among the 30 global systemically important banks closely watched by regulators.
It is precisely because of Credit Suisse's important influence in the global capital market that it is regarded as a "too-big-to-fail" financial institution. Swiss regulators fear that if nothing is done, the crisis of confidence could spill over to other banks.
Not only Switzerland, but many other countries also attach great importance to the Credit Suisse crisis. The Bank of Canada (Bank of Canada), the Bank of England (Bank of England), the Bank of Japan (Bank of Japan), the European Central Bank, the Federal Reserve and the SNB announced a coordinated action on March 3 to enhance the provision of liquidity through a dollar liquidity swap agreement, a press release issued by the SNB mentioned.
The Swiss government is fully mediated, and the "aftershocks" remain to be seen
UBS Group announced on the 19th that the acquisition was realized with the support of the Swiss Federal Government, the Swiss Financial Market Supervisory Authority and the Swiss National Bank. Both banks have access to liquidity support through the Swiss National Bank.
In addition to the significant discount, the deal also broke a number of conventions, such as the transaction skipping the shareholder approval process and the 160 billion Swiss Francisco Credit Suisse AT1 bond being declared zero by the Swiss Financial Supervisory Authority.
Can the Swiss federal government's painstaking efforts to "open the back door" really stop the subsequent risks of the Credit Suisse crisis?
"There are still doubts about whether the panic in the market will disappear immediately after UBS takes over Credit Suisse, and some of the lagging effects and market reactions will take time to appear, and the alarm of systemic risk cannot be lifted immediately." Li Yong, deputy director of the Expert Committee of the China Society of International Trade, said that in the process of asset splitting and restructuring after UBS took over, it takes time to observe what other problems Credit Suisse has in the process of asset splitting and restructuring, how big the hole it has left, whether UBS has enough liquidity to fill the hole, deal with new market variables and support normal business operation.
"Although the government bailout temporarily controls the risk, it may have a series of ripple effects. Interest rate hikes continue, economic growth continues to decline, and real enterprises will face a greater crisis in the future," Yang said.
Data map: On March 3, local time, customers lined up in front of the headquarters of Silicon Valley Bank in Santa Clara, California, USA. Photo by China News Agency reporter Liu Guanguan
Expert: A global financial crisis is less likely
Yang Delong said that Credit Suisse's face of acquisitions is actually a chain reaction triggered by the global banking crisis, and the Fed "violently" raised interest rates in response to the highest inflation level in four decades, triggering the European Central Bank to follow suit.
Credit Suisse is already vulnerable in terms of liquidity, and after the bankruptcy of three small and medium-sized banks in the United States, investors had lower risk appetite and panic money transfers, which eventually led to Credit Suisse's inability to recover.
As Credit Suisse plummeted, bank stocks in the European and American stock markets also fell sharply, and fears of "Lehman Moment 2.0" were once again on the rise. After all, the aftermath of the Silicon Valley bank collapse has not yet dissipated.
"There is a certain correlation between the two in time, and both have encountered a credit crisis and a run on the bank, but the current situation is different from the subprime mortgage crisis in 2008." Yang Delong believes that at present, the risk management control of most large banks is still good, and there is no failure of large banks in the United States. Although Credit Suisse is a large bank, the direct cause of its failure is not the Fed's interest rate hike, but its own investment mistakes, which should be an individual case, not a systemic risk.
"At present, there are no signs of panic selling in the market, and large-scale global financial risks are unlikely." Yang Delong said. (End)