The watchword today in the stock market is volatility. The maxi merger for the redemption of Credit Suisse by Ubs – after the fierce negotiations before the reopening of the markets and thus avoiding the risk of contagion effect – has already materialized. Specifically, the transaction between the two Swiss banks calls for Ubs to buy Credit Suisse for CHF 3 billion (Credit Suisse shareholders will receive 1 Ubs share for every 22.48 Credit Suisse shares held, equal to 0.76 francs/share) and, according to Credit Suisse’s statement announcing the merger “should be completed by the end of 2023 if possible”.
But after the announcement of the acquisition and after days of chaos, Asian stocks open lower. If the rescue of Credit Suisse by UBS reassured many savers, the operation will still have repercussions, such as the elimination of the value of subordinated bonds of up to 16 billion euros, “even before wiping all the equity capital as it would have been normal”, he specified Corriere della Sera. “Credit Suisse eliminates 16 billion bonds, but saves” Saudi and Qatari shareholders”, says the newspaper.
In short, the consequence is that holders of subordinated securities may be even less protected than shareholders. A difference in treatment that was also observed in the United States after the collapse of the Bank of Silicon Valley.
Meanwhile, from Europe they made it known that the crisis of Credits Suisse and Silicon Valley Bank “will be one of the points that will be discussed at the Eurosummit”, the summit of the leaders of the countries of the euro zone was also extended to include countries not belonging to the euro scheduled on the sidelines of Friday’s European Council. This was reported by a senior EU official, although it is not certain that he will enter into the conclusions. “Today the president of the ECB will have lunch with the president of the European Council, the president of the Commission and the president with the Eurogroup for a preparatory meeting” at the summit. “Basically it’s the ECB that has to share information and we saw the ECB statement yesterday,” he added.
For the Minister of Economy and Finance, Giancarlo Giorgetti, who spoke on the sidelines of the Intesa Sp event on Italy and the reform of European governance, “the repercussions on the Italian banking system are insignificant”. “It seems to me that now the markets have calmed down. I think the situation in Europe is under control.”
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
