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UBS Credit Suisse deal

ended 20. March 2023

UBS is buying Credit Suisse in an effort to avoid further turmoil in global banking, it was announced Sunday evening. The deal followed a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators. The Bank of England, as at the time of writing at 19:40 Sunday, is yet to respond. What impact, if any, could this have on the mortgage market and lending landscape? What could the trickle-down effect be for borrowers? Any thoughts, wing them across. 

5 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
No doubt this is good news to instil confidence in the banking system, but this is a massive kick in the teeth for Credit Suisse shareholders. Only last week the Swiss Central Bank was saying it regulated the bank correctly, it held more than sufficient capital and was in no danger of failing. Now, the government have bypassed shareholders and stitched up a deal that will see them get a fraction of the company value at the last closing price. It begs the question, why? Someone isn’t telling the full truth, and either the bank was in more trouble which means more might be, or management and government have well and truly done over millions of shareholders to quieten criticism of the authorities, the bank and the system more generally.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The lightning-fast sale of Credit Suisse, which bypassed normal regulatory procedures, highlights the concept that the big players are too big to fail, which is good for the global banking sector's stability. However, the fact that this intervention was even required for a European behemoth will send shockwaves through the market. The decision on the base rate cannot be immune to these seismic shifts, which may be a saving grace for UK borrowers.
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Editor
Justin Moy
Managing Director at EHF Mortgages
With higher interest rates causing issues within global banking, we may see other ways that the Government / Bank of England try to control inflation, not just the long-ball game of increasing base rate. In turn, this may have the unexpected result of lower mortgage rates, and curtail any plans to increase the base rate over the coming months. This might just be a modicum of good news for mortgage holders, but you can see how quickly everything can change, don't blink.
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Graham Cox
Director at Bridging Hub
What's alarming about recent events is just how quickly things have unravelled for both Silicon Valley Bank and Credit Suisse. Despite the latter's bailout from the Swiss government, it wasn't enough to reassure investors who were pulling out close to $10 billion dollars a day towards the end of last week. Credit Suisse is one of the 30 'too big to fail' banks. Well now there's 29, so let's hope market jitters subside. Otherwise it could get very hairy indeed. On a positive note, recent events mean the Bank of England is less likely to raise the base rate on Thursday. That's good news for mortgage rates, but it's equally possible swap rates will increase this week, offsetting any potential upside for borrowers.
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Amit Patel
Adviser at Trinity Finance
The Bank of England must now vote to leave rates on hold or vote to decrease the base rate following the announcement that UBS will be buying Credit Suisse. We need financial stability in the UK now more than ever and I think if they were to raise rates then this will catastrophically backfire. We need to learn lessons from our past mistakes, and let's hope the Monetary Policy Committee does exactly that.