Switzerland's two biggest banks today turned to the country's government and sovereign wealth funds to bail them out in a fresh wave of instability in the global financial sector.
UBS, Europe's biggest casualty of the sub-prime crisis and the larger of the two, received a Sfr6bn (£3bn) capital injection from the government in the form of mandatory convertible notes.In a deal financed at least initially by the U.S. Federal Reserve, the Swiss National Bank will buy a host of "currently illiquid securities" from UBS, attempting in one step to cleanse UBS's balance sheet of the mortgage-backed and other assets that have tangled the global financial system.
Credit Suisse is raising Sfr10bn from private investors and the Qatar Investment Authority as it wrote down a further Sfr2.4bn in its investment bank which delivered a pre-tax loss of Sfr3.2bn in the third quarter. CS as a whole said it expected to announce a net loss of around Sfr1.3bn next week.
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