NEW YORK: Bob Michele, the chief investment officer of fixed income at JP Morgan Asset Management, says he’s hopeful that UBS Group AG’s deal to buy its troubled Swiss rival Credit Suisse will be enough to stave off a wider selloff in European banks this week.
“I think the regulators in Europe, Switzerland and the United States, when you circle back a week ago, responded with a speed we’ve never seen before, cut a lot of red tape and stopped this in its tracks,” Michele told Bloomberg Television on Sunday.
UBS will pay its rival three billion francs (US$3.3bil or RM14.8bil) in an all-share deal that includes extensive government guarantees and liquidity provisions from the Swiss National Bank. The price per share marked a 99% decline from Credit Suisse’s peak in 2007.
Michele said he gives UBS “a break” for wanting the guarantees and provisions, and added that the bank only had “a couple days to do due diligence”.
The deal seeks to address client outflows and a massive rout in Credit Suisse’s stock and bonds over the past week following the collapse of smaller US lenders, including Silicon Valley Bank. — Bloomberg
