Following the recent banking failure of SVB, a ripple effect has caused many other banking institutions to fall. But, with any bearish market comes the opportunity for others to buy in. A time of chaos opens opportunities for others - take UBS as an example. On March 19th UBS Group AG, the largest Swiss investment bank agreed to buy Credit Suisse in a historic brokered deal.
The crumbling confidence of banks has recently spread among banks not just within the United States. UBS's purchase of its rival Swiss bank, Credit Suisse, aimed to prevent this lack of confidence from spreading. The UBS merger with Credit Suisse was announced to be done without the approval of shareholders and the overall size of Credit Suisse will be downsized.
The fall of Credit Suisse would mark one of the most significant moments in the banking world. It offers yet another layer of damage seen with the sudden banking collapse of SVB. Despite the $50 billion in liquidity funding Credit Suisse received from SNB, shares remained to decline in price.
As highlighted above, the overall net income of Credit Suisse has not yielded a positive quarter since 9/30/21. A year later, reported on 9/30/22, Credit Suisse's net income was down more than $8 billion.
The actions of some of the largest banks in the world accurately reflect the confidence they have in the banking system. Despite many people having a lack of confidence in banking institutions, the support highlighted by the biggest banks like UBS and JP Morgan demonstrates a level of resilience throughout the banking world. The collapse of SVB and the ripple among many other banks alike offer precautious of what could happen in the future.
Sources:
https://www.macrotrends.net/stocks/charts/SIVB/svb-financial-group/net-income
https://twitter.com/business/status/1637506674637385728
https://www.pbs.org/newshour/economy/11-big-banks-create-30-billion-rescue-package-for-first-republic
https://www.bloomberg.com/news/live-blog/2023-03-15/credit-suisse-in-crisis?
https://www.wsj.com/articles/ubs-offers-1-billion-to-take-over-credit-suisse-bfac51fa?
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