Credit Suisse buyout, bank measures aim to stem crisis

Authorities in Europe, North America and Asia have rolled out new measures to stem a banking crisis that has upended financial markets and sent oil prices to a 15-month low.

Swiss bank UBS agreed on 19 March to buy its struggling compatriot Credit Suisse for 3bn Swiss francs ($3.3bn), in a deal backed by a government loan of up to SFr100bn.

Shares in Credit Suisse slumped last week after the company admitted weaknesses in its accounting practices. The bank has a major presence in oil derivatives markets and trade finance, and its struggles threaten spillover effects that could put further pressure on smaller trading firms.

The UBS-Credit Suisse deal was followed by an announcement on 20 March that six central banks would increase the frequency of their dollar swap arrangements.

The co-ordinated move by the US Federal Reserve, Bank of Canada, Bank of England, European Central Bank, Bank of Japan and the Swiss National Bank effectively pumps more dollars into global markets, in an attempt to ease the financial strains following the collapse of two US banks last week.

The banking crisis raises questions about oil price direction linked to pending interest rate decisions and their impact on currencies. US benchmark WTI crude fell by more than $9/bl during 13-15 March, sinking below $68/bl for the first time since December 2021. Brent crude futures closed below $73/bl on 17 March, also a 15-month low.

Crude futures edged higher in Asian trading on 20 March, as markets absorbed the impact of the UBS-Credit Suisse deal and the central bank moves. Front-month May Brent crude futures rose by 1.1pc to $73.74/bl, but later fell back to $73.31/bl at 10:15 Singapore time (02:15 GMT).

By Kevin Foster