Switzerland’s biggest bank, UBS, agrees to rescue rival Credit Suisse

New Delhi: Under government-backed deal. UBS, the biggest Swiss Bank, has agreed to rescue Credit Suisse from facing massive default.

The announcement came after an emergency meeting in Switzerland between the two banks and the country's financial regulators giving much relief to global investors.

According to the Financial Times UBS is offering to pay up to $1bn (£820m) for Credit Suisse. Regulators are trying to facilitate a deal before markets reopen on Monday.

The Swiss National Bank said the deal was the best way to restore financial market confidence and manage economic risks. UBS has made a profit of $7.6bn in 2022.

The chairmen of both banks spoke at a news conference in Bern on Sunday.

In a statement, Switzerland's central bank said "a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation".

The federal government said to reduce any risks for UBS, it would guarantee against potential losses worth $9.6bn (£7.9bn). The Swiss central bank has also offered liquidity assistance of up to $110bn (£90bn).

Global financial institutions were quick to praise the deal. The deal has achieved what regulators set out to do - secure a result before the financial markets opened on Monday.

The UK Treasury welcomed the merger and the British government would continue to engage with the Financial Conduct Authority (FCA) and the Bank of England "as is usual".

Credit Suisse, the second-largest Swiss bank, is facing a crisis of confidence and its shares have fallen sharply in recent days, sending ripples of concern through the markets.

The trouble at Credit Suisse, combined with the failure of two smaller US banks during the last two weeks, has thrown the health of the global financial system into doubt.

Credit Suisse is one of around 30 banks deemed too big to fail because they are important to the banking system. The 167-year-old institution is loss-making and has faced a string of problems in recent years, including money laundering charges.

Credit Suisse reported a loss of 7.3bn Swiss francs ($7.9bn; £6.5bn) in 2022 - its worst year since the financial crisis of 2008 - and has warned it does not expect to be profitable until 2024.