Raphael Stevens

Bitcoin jumped on Monday as some investors turned to digital currencies amid a crisis in the traditional banking sector.
Bitcoin was up 3.5% at $28,225 at around 9:08 a.m. ET, according to CoinDesk.
Earlier in the day, bitcoin hit $28,554.07, it’s highest level in nine months.
The rally in bitcoin comes amid turmoil in the global banking sector which was sparked by the collapse of Silicon Valley Bank in the U.S.
On Sunday, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.2 billion).

Bitcoin is up 50% so far in 2023, beating major commodities and stock indexes. Industry insiders said the bank collapses have sent investors looking for alternatives to the traditional banking system and there is also anticipation of a slowdown in interest rate rises, which is helping bitcoin.
Filip Radwanski | Sopa Images | Lightrocket | Getty Images

Bitcoin jumped on Monday as some investors turned to digital currencies amid a crisis in the traditional banking sector.
Bitcoin was up 3.5% at $28,225 at around 9:08 a.m. ET, according to CoinDesk. Earlier in the day, bitcoin hit $28,554.07, it’s highest level in nine months.

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In the 24 hours to 5 a.m. ET Monday, the value of all the bitcoin in circulation gained around $26 billion.

The rally in bitcoin comes amid turmoil in the global banking sector which was sparked by the collapse of Silicon Valley Bank in the U.S. While American regulators stepped in to backstop deposits at SVB, concerns continued to mount about fragilities at regional banks in the U.S. and elsewhere.
In Europe, embattled Swiss bank Credit Suisse was in focus after the SVB failure and after its biggest backer, Saudi National Bank, said it could not provide further financial assistance to the lender due to regulatory restrictions.
On Sunday, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.2 billion) in a deal partly brokered by the Swiss regulators looking to stem contagion across the global banking sector.
Advocates of bitcoin have often dubbed it “digital gold” referring to it as a store of value, particularly in moments of global turmoil, and one that is uncorrelated with other asset classes. However, bitcoin has more often than not traded in line with equities, and in particular the tech-heavy Nasdaq.

But there are signs bitcoin’s price movement is beginning to decouple from stocks, for now.
“If one looks at the history of Bitcoin and why it was created in the first place, it was precisely for events like this where the current system shows signs of weakness and hence owning an uncorrelated asset helps,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“Over the years, this argument of Bitcoin being an uncorrelated asset class has been debated quite a bit, but we are now potentially seeing that viewpoint being vindicated in a lot of ways.”
While gold is up around 9% this year, bitcoin has surged more than 70%.
Interestingly, other cryptocurrencies on Monday did not see the same jump as in bitcoin. Ether was trading roughly flat. Other cryptocurrencies are not seen as “digital gold” by proponents in the same way that bitcoin is.
“As this banking crisis plays out, it’ll be interesting to continue to watch Bitcoin price action as more and more people think of owning Bitcoin as a clever alternate to the current system,” Ayyar said.

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Saudi National Bank confirmed to CNBC on Monday that it had been hit with a loss of around 80% on its investment in Credit Suisse.
The Riyadh-based bank bought Credit Suisse stock at 3.82 Swiss francs per share. UBS is paying Credit Suisse shareholders 0.76 Swiss francs per share
Despite the loss, Saudi National Bank says its broader strategy remains unchanged. Shares of the lender were up 0.58% on Monday at 9:20 a.m. London time.

Signage for Credit Suisse Group AG outside a building, which houses the company’s branch, in Tokyo, Japan, on Monday, March 20, 2023. UBS Group AG agreed to buy Credit Suisse Group in a historic, government-brokered deal aimed at containing a crisis of confidence that had started to spread across global financial markets.
Kosuke Okahara | Bloomberg | Getty Images

Saudi National Bank is nursing major losses in the wake of Credit Suisse’s failure after a deal was reached for UBS to buy the embattled Swiss lender for $3.2 billion.
Saudi National Bank — Credit Suisse’s largest shareholder — confirmed to CNBC on Monday that it had been hit with a loss of around 80% on its investment.

The Riyadh-based bank holds a 9.9% stake in Credit Suisse, having invested 1.4 billion Swiss francs ($1.5 billion) in the 167-year-old Swiss lender in November of last year, at 3.82 Swiss francs per share.
Under the terms of the rescue deal, UBS is paying Credit Suisse shareholders 0.76 Swiss francs per share.
The significant discount comes as regulators try to shore up the global banking system. The scramble for a rescue follows a tumultuous few weeks which saw the collapses of U.S.-based Silicon Valley Bank and First Republic bank as well as major stock price downturns across the banking sector internationally.
Shares of UBS, Switzerland’s largest bank, traded down 10.5% at 9:28 a.m. London time, while Europe’s banking sector was around 4% lower. Credit Suisse was down a whopping 62%.

The Saudi National Bank (SNB) headquarters beyond the King Abdullah Financial District Conference Center in the King Abdullah Financial District (KAFD) in Riyadh, Saudi Arabia, on Tuesday, Dec. 6, 2022.
Bloomberg | Bloomberg | Getty Images

Despite the loss, Saudi National Bank says its broader strategy remains unchanged. Shares of the lender were up 0.58% on Monday at 9:30 a.m. London time.

“As at December 2022, SNB’s investment in Credit Suisse constituted less than 0.5% of SNB’s total Assets, and c. 1.7% of SNB’s investments portfolio,” the Saudi National Bank said in a statement.
It said there was “nil impact on profitability” from a “regulatory capital perspective.”
“Changes in the valuation of SNB’s investment in Credit Suisse have no impact on SNB’s growth plans and forward looking 2023 guidance,” it added.
The Qatar Investment Authority, Credit Suisse’s second-largest investor, holds a 6.8% stake in the bank and also suffered a steep loss. QIA did not reply to a request for further details.

Saudi shareholder ‘shot themselves in the foot’

Credit Suisse’s demise was a long time coming, with a culmination of years of scandals, multi-billion dollar losses, leadership changes and a strategy that failed to inspire investor confidence. In February, the bank — Switzerland’s second-largest — reported its biggest annual loss since the 2008 financial crisis after clients withdrew more than 110 billion Swiss francs ($120 billion).
In December 2022, Credit Suisse raised some $4 billion in funding from investors, including major Gulf banks and sovereign wealth funds like Saudi National Bank, the Qatari Investment Authority and the Saudi Olayan Group. Norway’s sovereign wealth fund, Norges Bank Investment Management, is also a major shareholder.

SNB’s feeling right now is probably like all shareholders in CS — utter anger that management have let the situation get to this point.

Simon Fentham-Fletcher
Chief investment officer, Freedom Asset Management

The sharp and sudden downturn that began last week and led to the bank’s emergency sale is partially the fault of Saudi National Bank itself, some argue.
Saudi National Bank chairman Ammar Al Khudiary on Wednesday was asked by Bloomberg if it would increase its stake in the troubled Swiss lender. His reply was “absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory.”
The comment triggered investor panic and sent Credit Suisse shares down 24% during that session, even though the statement wasn’t in fact new; the Saudi bank said in October that it had no plans to expand its holdings beyond the current 9.9%.
“Even though the situation at Credit Suisse was not perfect and investors had a lot of question marks about the future of the bank, SNB didn’t help calm down investors and shot themselves in the foot” with the chairman’s comments, one UAE-based investment banker, who requested not to be named due to professional restrictions, told CNBC.
“As the largest shareholders in the bank, they had the most to lose if the bank goes under, and this is exactly what happened,” the banker said.

The Saudi National Bank chairman did attempt to calm the situation the following day, telling CNBC’s Hadley Gamble in Riyadh that “if you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses.”
“It’s panic, a little bit of panic. I believe completely unwarranted, whether it be for Credit Suisse or for the entire market,” Al Khudairy said. His comments ultimately failed to stem the bank’s continued rout.
The messy fallout, which spilled over across the entire banking sector, has ruptured market confidence and stoked fears of another global banking crisis. Swiss Finance Minister Karin Keller-Sutter set out to reassure angry taxpayers during a press conference Sunday, stressing that “this is a commercial solution and not a bailout.”

“SNB’s feeling right now is probably like all shareholders in CS — utter anger that management have let the situation get to this point,” Simon Fentham-Fletcher, chief investment officer at Abu Dhabi-based Freedom Asset Management, told CNBC.
“For years CS lurched from crisis to regulatory fine and changed management as it emerged in a new path. Finally the bank ran out of time,” he said.
He said that shareholders, specifically large ones like Saudi National Bank, will likely now want to reappraise the way they make investments and “where the stake is as large as it was here, will probably want to start embedding people so they properly understand what is happening inside their investments.”
“This might see a rise in activist shareholders not just wanting a board seat but real eyes and ears,” he added, noting that the last few weeks of market turmoil will undoubtedly put a significant dent in investor desire for risk.
From a risk perspective, Fentham-Fletcher said, “generally I think that we will see a pull back in all risk appetite as confidence has just taken a severe beating, and this combined with the apparent upending of the capital structure rules will undoubtedly make people pause.”

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First Republic Bank headquarters is seen on March 16, 2023 in San Francisco, California.
Tayfun Coskun | Anadolu Agency | Getty Images

Check out the companies making headlines before the market’s opening bell.
First Republic — The bank tumbled about 19% premarket after Standard & Poor’s cut its credit rating again, to B+ from BB+, on Sunday. S&P first lowered First Republic’s credit rating to junk status last week. The rating remains on CreditWatch Negative.

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UBS, Credit Suisse — Shares of UBS fell about 5% before the U.S. open, while Credit Suisse shares plunged 58%. UBS announced Sunday it would buy Credit Suisse for 3 billion Swiss francs, or $3.2 billion, as part of a deal orchestrated by Swiss regulators and the Swiss central bank. Other European banking stocks were also lower, with Deutsche Bank down 1.8% and ING Groep off by 4.2%. 
New York Community Bancorp – New York Community Bancorp jumped 25% in early trading after the Federal Deposit Insurance Corporation announced over the weekend that the bank’s subsidiary, Flagstar Bank, will take over large parts of Signature Bank’s deposits and loan portfolios, and all 40 of its branches.
Enphase Energy — The battery storage stock added 1% after Raymond James upgraded it to outperform from market perform, noting the selloff in Enphase shares, which are down nearly 31% this year.
US Bancorp — Shares of the bank holding company gained more than 4% in early trading, paring some of last week’s 19% loss following the closures Silicon Valley Bank and Signature Bank. Some analysts said UBS’s forced Credit Suisse merger over the weekend could boost investor sentiment toward U.S. regionals.
PacWest, Zions, KeyCorp — Shares of other U.S. regional banks were mostly higher early Monday morning as investors appraised the likelihood of expanded deposit insurance. Shares of PacWest rebounded nearly 20% premarket. Zions Bancorp. and KeyCorp each added about 2%.
— CNBC’s Sarah Min, Michelle Fox Theobald, Jesse Pound, Tanaya Macheel contributed reporting.

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Swiss authorities and regulators helped to facilitate the deal in order to stem the risk of contagion to the global banking system, as Credit Suisse teetered on the brink.
UBS Chairman Colm Kelleher said the acquisition was “attractive” for UBS shareholders, but clarified that, “as far as Credit Suisse is concerned, this is an emergency rescue.”

The logos of Swiss banks Credit Suisse and UBS on March 16, 2023 in Zurich, Switzerland.
Arnd Wiegmann | Getty Images News | Getty Images

Shares of Credit Suisse and UBS led losses on the pan-European Stoxx 600 index on Monday morning, shortly after the latter secured a 3 billion Swiss franc ($3.2 billion) “emergency rescue” of its embattled domestic rival.
Credit Suisse shares collapsed by 60% at around 11:20 a.m. London time (7:20 a.m. ET), while UBS traded 5% lower.

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Europe’s banking index was down nearly 1.8% around the same time, with lenders including ING, Societe Generale and Barclays all falling over 2.7%.
The declines come shortly after UBS agreed to buy Credit Suisse as part of a cut-price deal in an effort to stem the risk of contagion to the global banking system.
Swiss authorities and regulators helped to facilitate the deal, announced Sunday, as Credit Suisse teetered on the brink.
The size of Credit Suisse was a concern for the banking system, as was its global footprint given its multiple international subsidiaries. The 167-year-old bank’s balance sheet is around twice the size of Lehman Brothers’ when it collapsed, at about 530 billion Swiss francs at the end of last year.
The combined bank will be a massive lender, with more than $5 trillion in total invested assets and “sustainable value opportunities,” UBS said in a release late Sunday.

The bank’s chairman, Colm Kelleher, said the acquisition was “attractive” for UBS shareholders but clarified that “as far as Credit Suisse is concerned, this is an emergency rescue.”
“We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” he added in a statement. “Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses.”
Neil Shearing, group chief economist at Capital Economics, said a complete takeover of Credit Suisse may have been the best way to end doubts about its viability as a business, but the “devil will be in the details” of the UBS buyout agreement.
“One issue is that the reported price of $3,25bn (CHF0.5 per share) equates to ~4% of book value, and about 10% of Credit Suisse’s market value at the start of the year,” he highlighted in a note Monday.
“This suggests that a substantial part of Credit Suisse’s $570bn assets may be either impaired or perceived as being at risk of becoming impaired. This could set in train renewed jitters about the health of banks.”

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Regulators in Asia issued reassuring statements Monday that their banking systems remained robust and stable after Swiss banking giant UBS agreed to buy its rival Credit Suisse.
Swiss regulators played a key role in orchestrating the forced takeover, to stem a larger banking crisis that would threaten the global system.
From Hong Kong to Australia and Singapore, authorities said that their domestic banking systems were stable.

Jakub Porzycki | Nurphoto | Getty Images

Regulators in Asia issued reassuring statements Monday that their banking systems remained robust and stable after Swiss banking giant UBS agreed to buy its rival Credit Suisse for $3.25 billion.
Swiss regulators played a key role in orchestrating the forced takeover, to stem a larger banking crisis that would threaten the global system. The deal was announced before markets opened Monday. Last week, Credit Suisse logged its worst weekly decline since the onset of the coronavirus pandemic. 

The developments come shortly after the collapse of Silicon Valley Bank, which led to U.S. regulators backstopping SVB’s uninsured deposits and offering new funding for troubled banks. The slew of headlines around the global banking turmoil have heightened volatility and investor fears of a broader crisis.

Hong Kong says industry is resilient

The Hong Kong Monetary Authority said the city’s banking sector is resilient with strong capital and liquidity positions. Credit Suisse’s operations in the city comprise a branch supervised by the HKMA and two licensed corporations supervised by the Securities and Futures Commission. 
“All of them will open for business today as usual. Customers can continue to access their deposits with the branch and trading services provided by Credit Suisse for Hong Kong’s stock and derivatives markets,” HKMA said.

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“The total assets of Credit Suisse, Hong Kong Branch amounted to about HK$100 billion, representing less than 0.5% of the total assets of the Hong Kong banking sector. The exposures of the local banking sector to Credit Suisse are insignificant,” it added.
As of the end of February 2023, Credit Suisse was the ninth-largest listed structured product issuer in Hong Kong, accounting for about 4% of the total market in terms of market value of outstanding units, HKMA said.

Singapore says system is stable

In a similar move, the Monetary Authority of Singapore said Credit Suisse operations will continue in the city-state with “no interruptions or restrictions.”
Credit Suisse customers will continue to have full access to their accounts and “contracts with counterparties remain in force. The takeover is not expected to have an impact on the stability of Singapore’s banking system,” MAS said.
MAS added that UBS and Credit Suisse do not serve retail customers, as their primary activities in Singapore are in private banking and investment banking.
The central bank said it will remain in close contact with Swiss regulators, UBS and Credit Suisse as “the takeover is executed, to facilitate an orderly transition, including addressing any impact on employment.”

Japan banks ‘shielded’

As for Japan, the country’s banking system is unlikely to be affected by the deal, said Cyrus Daruwala, managing director of IDC Financial Services.  
“I think the exposure to a large wealth manager or an asset manager like Credit Suisse or UBS, in general speaking terms, would be approximately 4% of their portfolio,” Daruwala, told CNBC’s “Squawk Box Asia” on Monday.

That is not “a significant amount” he added. “Japan, I maintain has been relatively shielded, especially from Credit Suisse.”

Australia financials ‘strong’

Christopher Kent, assistant governor of the Reserve Bank of Australia, also emphasized domestic banks are robust despite the global panic triggered by banking failures in the U.S.
“Conditions in global bond markets have been strained recently following the failure of Silicon Valley Bank in the United States,” he said in a speech on Monday.
“Volatility in Australian financial markets has picked up but markets are still functioning and, most importantly, Australian banks are unquestionably strong.”
Banks are already well advanced on their bond issuance plans for the year and could defer “for a while,” Kent said. “Even if markets remain strained . . . Australian banks’ issuance will continue to benefit from the strength of their balance sheets.”
Overall, IDC’s Daruwala said banks in the region have “very, very little” exposure to Credit Suisse. “I don’t think it’s going to cause a ripple effect in Asia at least.”

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At a press conference in Bern on March 19th the chairmen of Credit Suisse and ubs, the two great rivals of Swiss banking, announced a momentous but unhappy union. After one weekend of haggling, and years of creeping despair, the merger valued Credit Suisse at around SFr3bn ($3.2bn). A 167-year-old institution is dead. Global banking is in a new, turbulent age.The value of the deal is a 60% discount on Credit Suisse’s stockmarket valuation, and a fraction of its SFr42bn book value. Shareholders have fared better than owners of the bank’s “additional Tier-1” bonds—a type of debt designed to absorb losses when a bank fails—who were wiped out in a move that may reverberate through bond markets. To get the deal over the line and avoid a market meltdown, the Swiss authorities agreed to provide ubs with SFr9bn of protection from losses it might sustain when disposing of unwanted bits of Credit Suisse, and to extend SFr100bn of liquidity.Both banks suffered during the global financial crisis of 2007-09; ubs received a bail-out from the Swiss government. More recently, their paths have diverged. As bosses at ubs steadied the ship, Credit Suisse sank lower during a series of high-profile mishaps. Last year the bank lost around SFr7bn, its worst performance since 2008. In the past three years Credit Suisse’s share price has fallen by 70%; that of ubs has more than doubled. In October Credit Suisse’s executives failed to convince the market of a plan they had assembled to cut costs and reallocate capital from their investment-banking arm.For all that, few would have predicted a tie-up even a week ago. But on March 15th Credit Suisse’s share price plunged by a quarter to its lowest-ever level, seemingly after comments from the chairman of the Saudi National Bank, its largest shareholder, who ruled out any more assistance. In the early hours of March 16th the Swiss National Bank (snb) attempted to reassure depositors and markets by offering to lend the bank up to SFr50bn. This should have been enough. Credit Suisse met the liquidity requirements expected of a systemically important bank. It had close to SFr100bn of loss-absorbing capital to chew through in the event of a catastrophic run.But there are no accountants in a foxhole. A stunning loss of confidence ensued. By March 17th Credit Suisse’s share price had fallen to barely above its level just before the snb had stepped in. Depositors were pulling their cash; counterparties feared the worst. Swiss officials returned with blunt force, pushing for a sale of the bank to ubs. Integrating the two residents of Zurich’s Paradeplatz will be painful. ubs plans to make billions of dollars of cuts, hoping that the transaction will have made it money by 2027. Executing such plans will be especially hard with Swiss regulators keeping close tabs. ubs’s shareholders will be understandably miffed. A week ago they owned a reformed, profitable institution. Now they hold shares in a much riskier proposition. But there was nobody to listen to their concerns. Swiss legislators moved quickly to ensure the sale did not have to meet regular shareholder approvals. The combination of the banks’ wealth-management and Swiss banking operations is one reason for hope. After the merger, both divisions will be powerhouses. ubs will probably hold nearly one-third of the Swiss domestic market. The jewel will remain its wealth-management business, which over the past five years has posted an impressive average return on equity of 24%. After the merger, the division will have $3.4trn of assets under management and a strong claim on the wallets of the world’s billionaires. Yet even here it is not all good news. Previous wealth-management mega-deals have seen clients flee. Some prefer to park their money with more than one institution—an approach which seems all the more sensible after the past fortnight.The bloodiest cost-cutting will be in the merged firm’s investment bank, much of it inflicted on traders and dealmakers at Credit Suisse. A commitment to keep investment banking firmly subservient to wealth management will mean plenty of layoffs. The offending risky businesses will be moved to a “non-core” unit, and quickly sold. Only those bankers with the most polished Rolodexes will survive. Although the bank had already begun down this path, the process will now be much more brutal. Financial policymakers around the world will be eager for the new institution to succeed. Turmoil in America and Europe has already given them cause for concern. On March 19th the Federal Reserve and five other rich-world central banks announced measures to boost dollar liquidity in an effort to ease strains on funding markets. But Swiss officials will be keenest of all for a healthy union. The combined assets of ubs and Credit Suisse are around twice Swiss gdp. Regulators will insist on higher capital ratios owing to the new megabank’s importance to the global economy; that will eat into profits. And the prospect of further trouble is yet more frightening. After all, this week’s solution—a merger—would be off the table. The new institution will simply be too big for such a deal. ■ More

At a press conference in Bern on March 19th the chairmen of Credit Suisse and ubs, the two great rivals of Swiss banking, announced a momentous but unhappy union. After one weekend of haggling, and years of creeping despair, the merger valued Credit Suisse at around SFr3bn ($3.2bn). A 167-year-old institution is dead. Global banking is in a new, turbulent age.The value of the deal is a 60% discount on Credit Suisse’s stockmarket valuation, and a fraction of its SFr42bn book value. Shareholders have fared better than owners of the bank’s “additional Tier-1” bonds—a type of debt designed to absorb losses when a bank fails—who were wiped out in a move that is reverberating through bond markets. The prices of similar debt issued by other banks have plunged.To get the deal over the line and avoid a market meltdown, the Swiss authorities agreed to provide ubs with SFr9bn of protection from losses it might sustain when disposing of unwanted bits of Credit Suisse, and to extend SFr100bn of liquidity.Both banks suffered during the global financial crisis of 2007-09; ubs received a bail-out from the Swiss government. More recently, their paths have diverged. As bosses at ubs steadied the ship, Credit Suisse sank lower during a series of high-profile mishaps. Last year the bank lost around SFr7bn, its worst performance since 2008. In the past three years Credit Suisse’s share price has fallen by 70%; that of ubs has more than doubled. In October Credit Suisse’s executives failed to convince the market of a plan they had assembled to cut costs and reallocate capital from their investment-banking arm.For all that, few would have predicted a tie-up even a week ago. But on March 15th Credit Suisse’s share price plunged by a quarter to its lowest-ever level, seemingly after comments from the chairman of the Saudi National Bank, its largest shareholder, who ruled out any more assistance. In the early hours of March 16th the Swiss National Bank (snb) attempted to reassure depositors and markets by offering to lend the bank up to SFr50bn. This should have been enough. Credit Suisse met the liquidity requirements expected of a systemically important bank. It had close to SFr100bn of loss-absorbing capital to chew through in the event of a catastrophic run.But there are no accountants in a foxhole. A stunning loss of confidence ensued. By March 17th Credit Suisse’s share price had fallen to barely above its level just before the snb had stepped in. Depositors were pulling their cash; counterparties feared the worst. Swiss officials returned with blunt force, pushing for a sale of the bank to ubs. Integrating the two residents of Zurich’s Paradeplatz will be painful. ubs plans to make billions of dollars of cuts, hoping that the transaction will have made it money by 2027. Executing such plans will be especially hard with Swiss regulators keeping close tabs. ubs’s shareholders will be understandably miffed. A week ago they owned a reformed, profitable institution. Now they hold shares in a much riskier proposition. But there was nobody to listen to their concerns. Swiss legislators moved quickly to ensure the sale did not have to meet regular shareholder approvals. The combination of the banks’ wealth-management and Swiss banking operations is one reason for hope. After the merger, both divisions will be powerhouses. ubs will probably hold nearly one-third of the Swiss domestic market. The jewel will remain its wealth-management business, which over the past five years has posted an impressive average return on equity of 24%. After the merger, the division will have $3.4trn of assets under management and a strong claim on the wallets of the world’s billionaires. Yet even here it is not all good news. Previous wealth-management mega-deals have seen clients flee. Some prefer to park their money with more than one institution—an approach which seems all the more sensible after the past fortnight.The bloodiest cost-cutting will be in the merged firm’s investment bank, much of it inflicted on traders and dealmakers at Credit Suisse. A commitment to keep investment banking firmly subservient to wealth management will mean plenty of layoffs. The offending risky businesses will be moved to a “non-core” unit, and quickly sold. Only those bankers with the most polished Rolodexes will survive. Although the bank had already begun down this path, the process will now be much more brutal. Financial policymakers around the world will be eager for the new institution to succeed. Turmoil in America and Europe has already given them cause for concern. On March 19th the Federal Reserve and five other rich-world central banks announced measures to boost dollar liquidity in an effort to ease strains on funding markets. But Swiss officials will be keenest of all for a healthy union. The combined assets of ubs and Credit Suisse are around twice Swiss gdp. Regulators will insist on higher capital ratios owing to the new megabank’s importance to the global economy; that will eat into profits. And the prospect of further trouble is yet more frightening. After all, this week’s solution—a merger—would be off the table. The new institution will simply be too big for such a deal. ■Editor’s note: This story has been updated for market moves on March 20th. More