UBS buys Credit Suisse. What does this mean for global banking stocks? What do analysts say?


In a deal worked out by the Swiss government and banking regulators, the Swiss banking giant UBS Group bought its rival UBS for $3.3 billion.

Credit Suisse as a bank has been having a hard time for the past few years because of bad management and a number of scandals.

Both Credit Suisse and UBS have been around in Switzerland since the 19th century. Over time, they have grown to become two of the largest wealth managers in the world and two of the largest banks in the country.

But the banking industry has changed a lot in recent years, and both banks have had to deal with problems that have affected their profits and market share.

Credit Suisse lost a lot of money in 2020 because Archegos Capital Management, a family office that used Credit Suisse’s prime brokerage services, went out of business. As a result, a number of top executives left the company, and Credit Suisse’s stock price has been going down ever since.

Price per share of Credit Suisse: How prices have changed in the past

The past price performance of UBS shares

What will happen to global banking stocks when UBS buys Credit Suisse?

Global banks can be affected by these sudden changes in the system, and the share prices of top banks in the US, Europe, and Asia, as well as in places where Credit Suisse has a large market share, have all gone down because of fears of contagion.

On March 20, shares of Standard Chartered Plc and HSBC fell more than 6% in Hong Kong, reaching their lowest levels in more than two months. Asia’s financial stocks on the MSCI index fell by 1.3%.

UBS could buy Credit Suisse because the Swiss central bank has promised a lot of help with liquidity, but stocks and bonds still have a lot of capital losses.

After such a big loss, it makes sense for investors to be wary of a certain type of asset, especially if the bank has been in business for more than 100 years.

What about India’s exposure now that UBS has bought Credit Suisse?

Credit Suisse has assets in India worth Rs 20,700 crore. Banking experts say that even if Credit Suisse went bankrupt, which is the worst-case scenario, India would not be directly at risk because it only holds 0.1% of the assets in the Indian banking system.

What do analysts say about UBS buying Credit Suisse?

Third Bridge Capital: The brokerage house said that the deal was the most important in European banking since 2008 and would have big effects on the industry as a whole.  These things could change not only the future of European banking but also the future of the wealth management industry as a whole.
The investment company said that Switzerland’s reputation as a financial center is broken. The Credit Suisse scandal will have serious effects on other Swiss financial institutions. It will also ruin Switzerland’s reputation as a country with good financial management, good regulatory oversight, and, well, investments that are a bit dull.

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