Several government entities have commented on UBS’s recently announced takeover of Credit Suisse. The acquisition was supported by the Swiss government.
Credit Suisse faced a crisis of confidence this past week, which could have spilled over into this coming week. Swiss government officials worked to craft a deal so that UBS could acquire Credit Suisse while having access to sufficient capital to counter any concerns.
The UK Financial Conduct Authority (FCA) stated:
“The FCA has been in contact with its Swiss counterparts and other UK regulatory authorities in advance of today’s announcements. The FCA has indicated that it is minded to approve the actions announced today in relation to the entities which fall under its regulatory and supervisory remit. The FCA continues to engage closely with UK and international regulatory partners to monitor market developments.”
The US Department of Treasury and the US Federal Reserve issued a joint statement by Secretary of the Treasury Janet L. Yellen and Federal Reserve Board Chair Jerome H. Powell:
“We welcome the announcements by the Swiss authorities today to support financial stability. The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. We have been in close contact with our international counterparts to support their implementation.”
While the move should help steady markets, worries persist that banking contagion can spread. Many US banks suffer from long-duration assets that have sunk in value due to the Fed’s strategy of rapidly increasing interest rates to stem inflation.