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Markets Volatile Despite Credit Suisse Rescue

By Stefan J. Bos, Chief International Correspondent Worthy News

BERN/LONDON/NEW YORK (Worthy News) – Markets across the world recovered late Monday but remained volatile despite efforts by authorities to portray the rescue of Credit Suisse bank by its rival UBS as a good deal.

Shares in European banks tumbled in early trading before recovering somewhat. European stock markets also started down but later rose after falling across much of Asia.

In the United States, the Dow and the S&P 500 indexes were rising, but the technically heavy Nasdaq was lower.

Shares in UBS initially sank on news that it would merge with troubled rival Credit Suisse falling by as much as 16 percent in early trading, the most since September 2008.

UBS shares later rose again by more than 2.5 percent.

Yet the turmoil underscored broader concerns about the future of banking.

Rising interest rates are putting pressure on some banks, analysts say, and market turmoil may give central banks a reason to pause, or slow down, rate hikes.

The government in Britain, which recently left the European Union, made it a point to say that the British banking system “remains safe and well capitalized.”

It follows concerns among investors about the long-term benefits of the rescue deal for Credit Suisse and the outlook for banks in Switzerland.

On Sunday, Swiss authorities persuaded UBS Group AG to buy rival Credit Suisse Group AG in creating one of Europe’s largest banks with more than Switzerland’s entire GDP in assets.

Under the deal, UBS will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse and assume up to $5.4 billion in losses.

In a package backed by the Swiss government, UBS agreed to pay 3 billion Swiss francs ($3.23 billion) for the 167-year-old Credit Suisse and assume up to $5.4 billion in losses.