UBS agrees to buy banking rival Credit Suisse in emergency rescue

The foundering Credit Suisse bank is set to be acquired by its rival UBS, the largest bank in Switzerland, in an emergency purchase meant to stave off a wider crisis in the global banking system.

The $3.2 billion takeover of Credit Suisse by UBS was arranged quickly, with officials looking to finalize the arrangement before markets opened on Monday.

“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 National Bank said in a statement Sunday. 

UBS will also be able to access a loan of up to $108 billion from the Swiss National Bank, according to the statement. 

The takeover of Credit Suisse comes as the bank was rocked by uncertainty in the financial sector resulting from the historic fall of Silicon Valley Bank in the U.S. earlier this month. After the California-based firm collapsed, a number of other banks, including those in other countries, faced shocks to their stock prices as investors and depositors lost confidence in some mid-sized banks.

U.S. officials stepped in to backstop all uninsured deposits at Silicon Valley Bank, going far beyond the $250,000 insurance guarantee offered by the Federal Deposit Insurance Corporation. But the moves to bolster consumer confidence has not completely curbed concerns of a broader banking crisis.

The failure of Credit Suisse comes after the Swiss National Bank last week offered it a lifeline of $54 billion. But that did not save the bank from persistent problems that had been accentuated by broader global banking issues. The bank recorded its worse losses since the 2008 financial crisis last year.