Major banks left scrambling as relief over Credit Suisse deal crumbles.

The banking industry was given a glimmer of hope when Credit Suisse announced a multibillion-dollar deal to settle claims related to its role in helping wealthy Americans evade taxes in 2014. However, that relief was short-lived as the agreement began to unravel, leaving major banks scrambling to assess the potential fallout. This turn of events has sent shockwaves through the industry, sparking concerns over the integrity of the financial system and the ability of regulators to hold banks accountable for their actions. In this article, we explore the latest developments in the Credit Suisse case and their implications for the banking sector.


The stock prices of banks experienced a decline on Monday as earlier relief over Credit Suisse’s rescue by UBS was replaced by concerns about the dangers of high-yield debt offered by major banks. In a deal arranged by Swiss regulators on Sunday, UBS acquired Credit Suisse for 3 billion Swiss francs (€3.03 billion) and agreed to undertake a potential loss of up to €5.7 billion. Despite initial confidence in Asia, investors became aware of the significant losses that Credit Suisse bondholders would face under UBS’s ownership. Some AT1 bondholders of Credit Suisse (which had a €20 billion notional value) were upset as they expected better protection than shareholders did in the takeover. This led to anxiety about various other risks, such as moral hazard, contagion, and the fragile state of US regional banks. Standard Chartered and HSBC shares both fell by over 6% to more than two-month lows in Hong Kong on Monday, with HSBC risk of its biggest one-day drop in six months. Mike O’Rourke, Chief Marketing Strategist of Jones Trading, stated that the problem had not disappeared despite the authorities’ intervention. The shotgun Swiss banking marriage was supported by a substantial government guarantee, which prevented one of the largest banking collapses since the fall of Lehman Brothers in 2008. To enhance market liquidity, the Fed joined central banks in Canada, England, Japan, the EU, and Switzerland in a coordinated approach in a global response not seen since the height of the pandemic. The European Central Bank pledged to lend support to the eurozone banks if needed, describing the Swiss rescue of Credit Suisse as “instrumental” in restoring calm.


In the world of banking and finance, deals can fall apart just as easily as they are made. The recent collapse of the Credit Suisse deal has sent shockwaves through the industry, leaving major banks scrambling to reassess their own positions in the market. The relief that many had felt about the deal has dissipated, and now it is a time of uncertainty and volatility. It remains to be seen how this will play out, but one thing is certain: the world of finance is always changing, and those who want to succeed must be prepared to adapt to the changing landscape.