Asian stocks fall to open week
Anything but Global markets appeared reassured on Monday by UBS's takeover of troubled Swiss bank Credit Suisse, with Asian shares falling at the start of the week and bonds seen as more vulnerable also taking a hit.
The announcement on Sunday of the takeover of Credit Suisse for 3 billion Swiss francs at a price of 0.76 francs per share by its big domestic rival may have banished nightmares about the Swiss system for the time being, but it did not allay concerns about contagion. liquidity in other countries as well, after the closure of three American credit institutions this month.
Moreover, the very acquisition of Credit Suisse at a price around 60% below that of Friday's close highlights the risk that UBS is taking and the risks that may exist in other banking systems, less stable than the Swiss one.
So, while the deal was greeted with relief by central banks around the world, markets are reacting with clear anxiety. Also contributing to this is the massive loss of Credit Suisse's convertible bond (CoCos) holdings, estimated at 16.3 billion francs, $17.6 billion.
Switzerland's central bank said in a statement that the bailout would “ensure financial stability and protect the Swiss economy.”
On Monday, Hong Kong's de facto central bank and securities regulator they joined those of other central banks in welcoming the announcement from Zurich and sought to reassure the public that business would continue as usual.
In Australia, Christopher Kent, assistant governor of financial markets at the Reserve Bank of Australia (RBA), pointed to pressure on investors: “Volatility in Australian financial markets has increased,” he told a conference on Monday. “But the markets are still working and, more importantly, Australian banks are undeniably strong – the banks' capital and liquidity positions are well above the regulators' requirements.”
Perhaps key to development in Switzerland to be the viable acquisition of Credit Suisse by many, even if in the markets the safeguards for bankruptcy, the known from the Greek financial crisis CDS (Credit Default Swaps) thw UBS are rising in the last 24 hours.
In addition to buying at a significantly lower market price and securing a 100 billion franc credit line from the Swiss central bank, UBS announced that its policy towards Credit Suisse clients will continue to be UBS's traditionally more conservative approach. .
With information from CNN, Bloomberg, BBC
