The UK’s central bank has said banks are “safe” after regulators approved a rescue deal for Credit Suisse. Which aimed at stopping fears over banks from spreading.
After regulators desperately sought a deal all day on Sunday, the bank was acquired by competitor UBS in a Swiss government-backed deal.
Due to the failure of two smaller US institutions in recent weeks, there are concerns about the global financial system at this time.
Regulators moved quickly, but equity markets in Asia and the UK still declined.
Early trading saw the Nikkei 225 in Japan fall 1.4%. While the FTSE 100 index in London fell 1.6%. Hong Kong’s Hang Seng Index dropped 2.6%.
However, analysts do not expect a repeat of the financial crisis of 2008. When the failure of several major banks led to a worldwide recession.
According to the Swiss National Bank, the Credit Suisse rescue plan was the most effective method to regain market confidence and control economic risk.
Regulators moved quickly, but equity markets in Asia and the UK still declined.
Early trading saw the Nikkei 225 in Japan fall 1.4%, while the FTSE 100 index in London fell 1.6%. Hong Kong’s Hang Seng Index dropped 2.6%.
However, analysts do not expect a repeat of the financial crisis of 2008, when the failure of several major banks led to a worldwide recession.
According to the Swiss National Bank, the Credit Suisse rescue plan was the most effective method to regain market confidence and control economic risk.
The last-minute deal valued Credit Suisse at just over $3.15bn (£2.6bn), a fraction of its $8bn price tag on Friday.
But the deal has achieved what regulators set out to do – secure a result before the financial markets opened on Monday.
Mark Yallop, the former UK chief executive of UBS, said the his former employer’s purchase of Credit Suisse “should” do the job of reassuring investors.
The Bank of England, along with the Bank of Japan, Bank of Canada, the European Central Bank, the US Federal Reserve, and the Swiss National Bank, said the move served as an “important backstop to ease strains in global funding markets” and take the pressure off banks.
