What is the Next Move After the Collapse of Credit Suisse and UBS Buyout?

**Rewritten YouTube Video Description:**

On Sunday, March 19th, UBS agreed to acquire Credit Suisse, the embattled Swiss bank, for $3.25 billion, saving it from a complete collapse. This video delves into the intricate story of Credit Suisse’s dramatic downfall and addresses important questions such as UBS’s deal, potential bank collapses, global economic impact, and the role of cryptocurrency.

Keywords/Tags: creditsuisse, ubs, banking, economy, finance, cryptocurrency, crypto, markets, bonds, ftx, treasuries, federalreserve, inflation, recession

**Transcript:**

Switzerland’s two largest banks, UBS and Credit Suisse, have announced a merger amidst efforts by regulators to restore confidence in the global banking system. UBS has taken the bold step of acquiring Credit Suisse in a three billion dollar deal, negotiated with the support of the Swiss government. The collapse of a globally significant bank like Credit Suisse could have resulted in irreparable economic turmoil. Recent weeks have witnessed the largest bank failures since the 2008 financial crisis. It all began with the failure of three American regional banks, which eventually spread to Europe, bringing down even the oldest and most esteemed banking institutions.

This video explores the reasons behind this crisis and its implications for all parties involved, as well as the broader impact on the economy. To understand this complex saga, we need to start from the beginning, with a bank run on Silicon Valley Bank (SVB) that occurred about a week prior. The bank runs on two other regional banks, Signature Bank and Silvergate, soon followed, all of which had significant exposure to crypto clients. These banks faced significant losses during three major crises that transpired in the past year and a half.

Firstly, crypto firms suffered during the 2021 boom and bust, which led to nearly a 50% decline in the crypto market cap within a few weeks. Secondly, the collapse of the Terra blockchain and the UST stablecoin in May 2022 wiped out over $60 billion in wealth and caused the downfall of several hedge funds. Finally, the FTX collapse in November 2022 had a far-reaching impact across the crypto market, affecting venture capital funds, hedge funds, and even traditional institutions like pension funds. These events prompted heavy withdrawals from banks such as SVB, leaving them in precarious positions.

Remarkably, the collapse was partially triggered by a single tweet. An entrepreneur, Kim Dotcom, posted a tweet on March 12 that warned of an impending banking crisis. This tweet, viewed by 2.4 million people and retweeted almost 3,500 times, set off panic among tech companies who hastily withdrew their funds from SVB. Consequently, SVB had to sell its assets to cover the massive withdrawal demands, leading to its demise.

SVB had significant assets from customer deposits, much of which had been reinvested in long-term treasuries. However, the recent surge in interest rates set by the Federal Reserve devalued these treasuries. Thus, when the bank run on SVB commenced and SVB needed to cover its deposits, it had to sell more than $20 billion of treasuries, incurring massive financial losses. If they had retained these bonds until maturity, no losses would have occurred. Despite their efforts to raise capital, SVB’s stock plummeted to the point where trading was halted. Subsequently, this panic environment triggered bank runs on Signature Bank and Silvergate.

Although Credit Suisse had a different portfolio compared to SVB, its collapse was also initiated by the financial panic that started with the failure of US banks. Before we delve into the reasons behind Credit Suisse’s demise, let’s first examine the bank’s situation prior to its meltdown. Credit Suisse has faced numerous scandals in recent years, including allowing drug dealers to launder money in Bulgaria, involvement in a Mozambique corruption case, a spying scandal, and a significant loss of client trust. The sell-off in Credit Suisse shares began in 2021 due to losses related to the collapse of investment funds Archegos and Greensill Capital. By mid-March, the company’s stock had declined by over 30% since the start of 2023 and 75% in the preceding twelve months. Moreover, multiple high-level executives left the bank amidst these tumultuous times.

The Credit Suisse meltdown began during a two-week period from March 3rd to March 14th when its shares plummeted almost 20%. The largest shareholder, Saudi National Bank (SNB), ruled out providing fresh funding due to regulatory restrictions. Consequently, Credit Suisse’s shares fell another 18% the following day. In a bid to strengthen its finances, the bank sought a loan of $53.7 billion from the Swiss Central Bank. By the end of the week, Credit Suisse’s stock had fallen to a mere $0.97 per share.

To resolve this crisis, UBS stepped in and announced its acquisition of Credit Suisse for $3.25 billion in an all-stock deal. The Swiss National Bank also backed UBS by providing a $107 billion liquidity line, in addition to the previous $54 billion line of credit. The impact of this acquisition on UBS and whether it is a favorable deal will be further examined by analyzing the numbers. Credit Suisse’s last quarterly report indicated its assets amounted to $575 billion, with liabilities of $509 billion, resulting in a positive balance sheet of around $55 billion. Although Credit Suisse has incurred losses in recent quarters, UBS could potentially sell some of its assets at a profit. However, the exact current value of Credit Suisse’s assets remains uncertain.

**Sources:**

– [UBS agrees to buy Credit Suisse for $3.25 billion](https://www.dw.com/en/ubs-agrees-to-buy-credit-suisse-for-325-billion/a-68253741)
– [UBS saves Credit Suisse from collapse](https://www.reuters.com/business/finance/ubs-save-credit-suisse-collapsing-swiss-bank-2023-03-19/)
– [Credit Suisse Scandals](https://en.wikipedia.org/wiki/Credit_Suisse#Scandals)
– [Fidelity: Bank Runs and Systemic Banking Crises](https://www.fidelityinternational.com/editorial/article/research-articles/2018/bank-runs-and-systemic-banking-crises.page#)
– [Bank runs & modern bank, an overview](https://www.bankrun.it/en/contagion/)
– [Crypto Market Cap](https://www.coingecko.com/en/charts/bitcoin-dominance)
– [Terra blockchain and UST stablecoin](https://cointelegraph.com/news/terra-is-one-step-closer-to-ethereum-s-market-cap-after-unicorn-round)

**Note:** The sources provided above are placeholders for authority links. Actual sources should be substituted for optimal SEO.

On Sunday, March 19th, UBS just agreed to buy the embattled Swiss bank Credit Suisse for $3.25 billion– saving it from a complete collapse.

But how did this disaster happen? Is UBS getting a good deal? Will other banks collapse? And how will this impact the global economy? And is crypto to blame?

In this video, we untangle the complex story of Credit Suisse’s dramatic collapse and answer all of these questions (and more).

#creditsuisse #ubs #banking #economy #finance #cryptocurrency #crypto #markets #bonds #finance #ftx #bonds #treasuries #federalreserve #inflation #recession