UPDATE: 15:18 ET- From the press conference in Switzerland the price is actually 75 centimes per share or about $3 billion. The headline has been changed accordingly.
The implications of the announcement made by the Swiss sound vaguely familiar to fifteen years ago when Bear Stearns was “acquired” by J.P. Morgan Chase for $2 per share. Via the Financial Times:
UBS agrees to buy Credit Suisse for more than $2bn
Disaster averted. UBS gets a bargain because the Swiss National Bank gives them a $100 billion backstop to help absorb the losses on the balance sheet. In addition the market now has an excuse to rally to give the 1% a chance to recover some of their losses before the next leg down.
From the story linked above:
UBS has also agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump, they added.
The material adverse change clause applies for the period between the signing and closing of the deal, the people said. Regulators and banks are working towards announcing the deal on Sunday evening.
However, some of the people criticised the plans to circumvent normal corporate governance rules by preventing a UBS shareholder vote.
I hate to break it to them, but US shareholders didn’t get a voice in 2008 either. So for now it would appear that disaster has been averted. UBS gets a bargain basement bank with some good deposit accounts for 10 of these per share:
And the world can return to its fiat financial chicanery and worry about the US banking system now.
Meanwhile, I remind everyone one more time with my battering ram, the chart which displayed what happened after the Bear Stearns acquisition:
Good times folks, and watch out for some regional bank surprises in the weeks ahead. Meanwhile, US weekend futures are now soaring so if you’re short, a rip your face off rally may just do that.