By Timo Kirez
GENEVA (AA) - Credit Suisse, the major Swiss bank in deep trouble, will finally be taken over by its Swiss rival UBS.
This was announced by the Swiss government in a media release sent simultaneously with the start of a press conference on Sunday evening.
In an effort to reduce any risks to UBS, the federal government is also awarding UBS a guarantee of 9 billion Swiss francs ($9.79 billion) to cover potential losses on certain assets UBS assumes as part of the deal, should any future losses exceed a certain threshold.
"The UBS takeover is the best solution to restore confidence," said Swiss President Alain Berset.
Karin Keller-Sutter, the head of the Swiss Finance Department, said that a Credit Suisse failure would have had serious consequences for the Swiss economy.
The Swiss National Bank (SNB) has offered UBS a liquidity line of about $100 billion as part of the deal.
Initial talks between UBS and Credit Suisse are said to have taken place as early as Wednesday. In total, there were four meetings in four days. There were also exchanges with the US and the UK, Keller-Sutter said. "Today, negotiations between UBS and CS were successfully concluded," she added.
The Swiss government regretted that Credit Suisse was not able to overcome the difficulties itself. "We regret this not least because many thousands of employees are affected," Keller-Sutter said.
The private takeover of Credit Suisse by UBS, supported by government-guaranteed liquidity assistance, strengthened confidence in the financial system and created stability for the Swiss economy and the Swiss and international financial system, Keller-Sutter said.
All foreign regulators involved have deemed the Swiss authorities' action to be on target. This will also reassure the international financial markets, the head of the Swiss Finance Department added.