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Britain’s central bank said Britain’s financial system remained “safe and sound” after the Swiss government brokered a merger of two of Britain’s biggest banks to save Credit Suisse from bankruptcy.
Swiss investment bank UBS announced on Sunday evening that it would buy rival Credit Suisse in a deal worth more than $3 billion.
Credit Suisse is based in Canary Wharf, UK and all UK operations remain open as customers have access to deposits.
The Bank of England said on Sunday evening: “We welcome the comprehensive set of actions announced today by the Swiss authorities to support financial stability.
“We have been working closely with our international counterparts throughout the preparation of today’s announcement and will continue to support their implementation.
“The UK banking system remains well capitalized and funded, safe and sound.”
However, in a sign of global anxiety, the Bank of England, along with the US Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of Japan and the Swiss National Bank, have taken steps to strengthen the supply of liquidity. rice field.
Seven-day US dollar swap lines between the Fed and other central banks will be raised from weekly to daily.
“These networks of inter-central bank swap lines are a set of available standing facilities that act as an important liquidity backstop to ease tensions in global funding markets, thereby allowing households and It will help mitigate the impact of such strains on the supply of credit to businesses,” the Bank of England said.
Finance Minister Jeremy Hunt said:
“The Bank of England has confirmed that the UK banking system is safe, sound and well capitalized.”
The UK’s Financial Conduct Authority said it “intended to approve” the portion of the UBS/Credit Suisse deal that falls within its jurisdiction in the UK.
contagion
Credit Suisse has been in trouble for years, but the market turmoil caused by the collapse of US midsize lender Silicon Valley Bank pushed it past its limits last week.
The March 10 bank failure triggered a crisis of confidence in the global banking industry.
Credit Suisse dropped the bomb on March 14, announcing that it had discovered “material deficiencies” in its financial reporting that could lead to material misstatements in its annual financial statements.
On Sunday evening, Swiss President Alain Berset said at a press conference: “The outflow of liquidity and market volatility make it no longer possible to restore the necessary confidence and a quick and stable solution is absolutely necessary. It was shown that
“The acquisition of Credit Suisse by UBS is the best solution to restore the confidence that has been lacking in the financial markets recently and to best manage the risks to our country and its citizens,” he added.
But the bailout with UBS is not expected to calm the market. As part of the deal, approximately $17 billion worth of Credit Suisse bonds were wiped out.
Credit Suisse shares were down about 63% on Monday morning, while UBS shares were down 16%.
London’s top index, the FTSE 100, fell by up to 129 points just after the markets opened on Monday morning, led by the country’s biggest banks.
Standard Chartered shares were down more than 7% at one point, while Barclays was down just under 6%.
The FTSE 100 Index has fallen nearly 9% since the Silicon Valley Bank collapse.
“have confidence”
However, some UK banking experts deny comparisons to the 2008 global financial crisis.
Lord Turner of Eckinswell, the UK’s head of financial regulators during the last crisis and who helped redesign global banking, said: Sunday Times He is confident in his financial stability.
“First, there is much more capital in the banking system. Second, the sustained credit-fueled global real estate boom is far from over. There are far fewer opaque interconnections between the shadow banking system…to me the balance is still that we are less likely to be hit by a systemic financial crisis.”
The US Treasury has also shown confidence in its own banking system.
Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell issued a joint statement on March 19 welcoming the UBS-Credit Suisse deal.
“We welcome today’s announcement by the Swiss authorities to support financial stability,” the statement said. “The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. I came.”
Emel Akan and PA Media contributed to this report.
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