Let’s stop ‘Black Monday’ again… U.S.-European authorities tense over the spread of market fears

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Observations have been raised that Switzerland’s No. 1 bank UBS is expected to acquire No. 2 bank Credit Suisse (CS), which is on the brink of bankruptcy. The U.S. asked Wall Street big names like Warren Buffett to join in bailing out banks. The United States and Europe are struggling to calm fears of a global financial crisis by preventing another ‘Black Monday’ (stock crash).

On the 18th (local time), the Financial Times (FT) of the UK and the Wall Street Journal (WSJ) of the US reported that the acquisition of CS by UBS was imminent. If UBS, which has assets of 1.1 trillion dollars (1440 trillion won), acquires CS for 575 billion dollars (753 trillion won), a super-large European ‘dinosaur bank’ will be born. Experts predict that this will be recorded as the biggest event since the 2008 global financial crisis in world banking history.

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CNN reported that the Swiss Treasury held a crisis management meeting to decide the fate of CS from 5 pm on the same day, citing Swiss media. The FT also reported that UBS and CS would hold board meetings on the 19th. The WSJ said an agreement to acquire the two companies could be reached on the 19th or earlier.

According to the FT, the Swiss financial authorities are also seeking emergency measures to skip the six-week shareholder consultation and shareholders’ meeting procedures required by local law to announce the merger and acquisition of the two companies before the stock market opens on Monday, the 20th. This is to prevent Black Monday due to massive deposit withdrawals (bank runs) caused by market fears.

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A high-ranking official in the US administration of Joe Biden contacted Warren Buffett, the ‘investment genius’, several times and asked him to solve the small and medium-sized bank crisis, US Bloomberg News reported on the 18th, citing an official. Previously, JPMorgan Chase Chairman Jamie Dimon also tried to rescue First Republic, which was in a bank run crisis, at the request of US Treasury Secretary Janet Yellen on the 16th.

Although 11 major U.S. banks announced deposits of 30 billion dollars (39 trillion won), First Republic stock prices plummeted 33 percent on the 17th, which was not enough to calm fears of a financial crisis. The U.S. Small and Medium Banks Association demanded stronger measures from Yellen and others, saying, “The Federal Deposit Insurance Corporation (FDIC) must guarantee full deposits for two years to calm fears.”

New York =

Paris =

Source: Donga

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