UBS Agrees to Buy Credit Suisse in Emergency Deal
What Happened
On March 19, Switzerland brokered a shotgun marriage: UBS will acquire Credit Suisse for about CHF 3 billion in stock, with the SNB providing over CHF 100 billion in liquidity and the government offering loss guarantees. Holders of Credit Suisse AT1 bonds were wiped out, while equity investors were heavily diluted.
What It Means
Authorities prioritized speed over process to halt a confidence spiral that began with years of scandals and accelerated after Silicon Valley Bank failed. The AT1 wipeout rattled the $250 billion AT1 market, forcing traders to rethink recovery hierarchies and widening spreads on bank capital.
What I Think
Trust evaporates slowly, then all at once. UBS inherits risk and opportunity: a stronger domestic franchise but complex integration. I expect tighter European bank funding, more supervisory scrutiny of capital stacks, and a thinner line between liquidity support and resolution.
Market Terms
- Shotgun bank merger – UBS absorbing Credit Suisse under regulator pressure.
- AT1 wipeout – Subordinated bondholders taking zero in the deal structure.
- Liquidity backstop wall – SNB providing over CHF 100B to steady funding.
- Capital-spread repricing – AT1 markets widening as hierarchy fears grow.
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