Markets Overview

  • ASX SPI 200 futures down 1.4% to 6,921.00
  • Dow Average down 1.2% to 31,861.98
  • Aussie up 1.0% to 0.6722 per US$
  • U.S. 10-year yield fell 14.9bps to 3.4286%
  • Australia 3-year bond yield rose 16 bps to 3.01%
  • Australia 10-year bond yield rose 6 bps to 3.39%
  • Gold spot up 3.6% to $1,989.25
  • Brent futures down 2.3% to $72.97/bbl

Economic Events

  • 09:05: (AU) RBA’s Kent-Speech

UBS Group AG agreed to buy Credit Suisse Group AG in a historic, government-brokered deal aimed at containing a crisis of confidence that had started to spread across global financial markets.

The Swiss bank is paying 3 billion francs ($3.25 billion) for its rival in an all-share deal that includes extensive government guarantees and liquidity provisions. The price is less than half the 7.4 billion francs Credit Suisse was worth at the close of trading on Friday.

The Swiss National Bank is offering a 100 billion-franc liquidity assistance to UBS while the government is granting a 9 billion-franc guarantee for potential losses from assets UBS is taking over. Regulator Finma said about 16 billion francs of Credit Suisse bonds will become worthless to ensure private investors help shoulder the costs.

The plan, negotiated in hastily arranged crisis talks over the weekend, 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. A liquidity backstop by the Swiss central bank mid-week failed to end a market drama that threatened to send counterparties fleeing, with potential ramifications for the broader industry.

“It was indispensable that we acted quickly and find a solution as quickly as possible“ given that Credit Suisse is a systemically important bank, Swiss National Bank President Thomas Jordan said at a press conference late Sunday.

US authorities had been working with their Swiss counterparts because both lenders have operations in the US and are considered systemically important in Switzerland, Bloomberg reported earlier. Authorities sought an agreement before markets opened again in Asia.

UBS Chairman Colm Kelleher said he will shrink Credit Suisse’s investment bank, a unit that has racked up losses in recent years, while he’s determined to keep the Swiss universal bank, the one business of Credit Suisse that remained a relative bastion of stability in the crisis.

“Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” he said at a press conference announcing the deal.

The takeover of the 166 year-old lender marks a historic event for the nation and global finance. The former Schweizerische Kreditanstalt was founded by industrialist Alfred Escher in 1856 to finance the build-out of the mountainous nation’s railway network. It had grown into global powerhouse symbolizing Switzerland’s role as a global financial center, before struggling to adapt to a changed banking landscape after the financial crisis.

UBS traces its roots back through some 370 separate institutions over 160 years, culminating in the merger of the Union Bank of Switzerland and the Swiss Bank Corporation in 1998. After emerging from a state bailout during the 2008 financial crisis, UBS built a reputation as one of the world’s largest wealth managers, catering to high- and ultra-high net worth individuals globally.

While Credit Suisse avoided a bailout during the financial crisis, it has been hammered over recent years by a series of blowups, scandals, leadership changes and legal issues. Clients had pulled more than $100 billion of assets in the last three months of last year as concerns mounted about its financial health, and the outflows continued even after it tapped shareholders in a 4 billion-franc capital raise.

Other News

Elon Musk says Twitter will now send all journalists an automatic poop emoji when they make a press request to the social media platform.

The billionaire tweeted out the new policy, saying “ now auto responds with (emoji).”

An email sent by The Independent to the Twitter press team on Sunday instantly received a poop emoji in return.

Mr Musk, who already has no press team at Tesla, fired the press team at Twitter during massive layoffs after he bought the company for an eye-popping $44bn last October.

Twitter fired around 50 per cent of its 7,500 employees after the South African-born businessman bought the company.

And it now has a workforce of around 2,000 as Mr Musk has sought to slash costs at the San Francisco company.

It is not the first time that Mr Musk has publicly used the emoji.

Last July, Twitter cited posts by Mr Musk, including one a single poop emoji, as evidence he had disparaged the company as he tried unsuccessfully to pull out of buying it.

Earlier this month Mr Musk apologised after a humiliating exchange in which he appeared to mock a disabled Twitter worker.

Mr Musk had accused his employee of doing no actual work, of being “the worst” and more – after he had asked whether he was still employed by Twitter, having apparently failed to get a response any other way.

The Twitter boss said that he had received bad information about the situation, and had now had a video call with the affected staff member to apologise.

Icelandic entrepreneur Halli Thorleifsson – who sold his company to Twitter and has been voted as the country’s person of the year – had sent a direct public tweet to the billionaire after he was locked out of his work’s computer system, telling Musk he could not get HR to respond to him.

(The Independent)