European supervisors have tried to settle markets and stop a rout in the market for convertible bank bonds on Monday, as investors digest Credit Suisse rescue deal
eliminates immediate tail risks in the banking sector, argues analysts at Jefferies, but it also raises questions.
However, in terms of sector ramifications, while this deal significantly reduces the immediate systemic risk from CS’ weaknesses, we think two key negatives elements will also catch the eye: that CS’ AT1 holders are wiped out whereas shareholders are not entirely, though normally more junior in creditworthiness, and that shareholder approval was not asked on UBS’ side for this deal.
The low price paid and significant safety net provided to UBS are positive, while UBS’ strategy is unchanged. However, UBS embarks significant execution risk, litigation risk, the buyback is temporarily suspended , UBS’ capital requirement is likely to be revised up, and management focus will be captured by this deal for many quarters, maybe years.The turmoil in the banking sector may deter the Bank of England from raising borrowing cost again this week.
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
UBS bank to buy Credit Suisse | 7NEWSSwitzerland's biggest bank, UBS, is to buy its troubled rival, CreditSuisse. The multi-billion dollar deal has been thrown together to try to resolve a crisis in confidence in Credit Suisse, before markets reopen for the week. CreditSuisse 7NEWS
Read more »
Swiss bank UBS steps in amid Credit Suisse crisisA $50 billion Swiss franc line of credit from the Swiss Central Bank was not enough to save Credit Suisse. The threat of a global banking meltdown became real in the minds of regulators and politicians. Switzerland's other banking giant UBS stepped in.
Read more »
UBS’ takeover of Credit Suisse should ‘calm jitters’UBS’s takeover of Credit Suisse should “calm jitters”, according to CommSec’s Ryan Felsman. “Over the course of the weekend, what we have seen is an up to $3 billion deal for Switzerland’s largest bank UBS to takeover Switzerland’s second largest bank Credit Suisse,” he told Sky News Australia. “That deal is an all-shared deal at 0.5 Swiss Francs, and that’s a lot lower than Credit Suisse’s share price on Friday.” Presented by CommSec.
Read more »
Why the Credit Suisse-UBS deal simply must get doneGlobal markets can’t afford for the takeover talks between UBS and stricken Swiss rival Credit Suisse to fail.
Read more »
Credit Suisse Aussie team in the dark on UBS takeoverCredit Suisse’s local bankers, analysts and traders are in the dark as their Swiss overlords talk to regulators and arch rival UBS about a mooted tie-up.
Read more »
UBS to buy Credit Suisse in historic deal to end crisisThe Swiss bank is paying more than $US2 billion for its rival, according to people with knowledge of the matter.
Read more »