The FTSE was lower on Monday as UBS announced it will buy rival Swiss bank Credit Suisse for $3.25bn. Photo: Yui Mok/PA via Getty

European stocks and the FTSE 100 edged lower on Monday morning as markets digested the news that UBS (UBS) will buy rival Swiss bank Credit Suisse (CS) for $3.25bn (£2.65bn).

The FTSE 100 (^FTSE) lost 1.7% to open at 7,257, while the CAC 40 (^FCHI) in Paris fell 1.05% to 6,826 points. In Germany, the DAX (^GDAXI) fell 0.36% to 14,714.

UBS will also assume up to $5.4bn in losses as part of the deal, which is backed by a Swiss guarantee and expected to close by the end of 2023.

Victoria Scholar, head of investment, Interactive Investor said: “UBS’ acquisition of Credit Suisse is the key focus for markets today with European bourses still under pressure despite the rescue deal.

“The FTSE 100 is trading lower with financials including Standard Chartered (STAN.L), Barclays (BARC.L), Lloyds (LLOY.L) and NatWest (NWG.L) trading at the bottom of the basket. Banks, financial services, and insurance are the worst performing sectors across Europe.”

Read more: UK house prices rise by £3,000 in March

Following the takeover announcement on Sunday, the US Federal Reserve and several other major central banks announced a coordinated effort to boost the flow of US dollars through the global financial system to help keep credit moving.

“The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements,” the central banks said in a joint statement.

The move comes after a week of volatility that started with the collapse of two US banks — Silicon Valley Bank and Signature Bank (SBNY) — earlier this month.

However, UBS CEO Ralph Hamers said there were still many details to be worked through, according to Reuters.

"I know that there must be still questions that we have not been able to answer," he said. "And I understand that and I even want to apologise for it."



Brian Jacobsen, senior investment strategist at Allspring Global Investments, told Reuters: "Provided markets don’t sniff out other lingering problems, I’d think this should be pretty positive."

US and Asia

In early Asia trade, Tokyo’s Nikkei 225 (^N225) fell 1.42% to 26,945 points, while the Hang Seng (^HSI) in Hong Kong lost 3.18% to 18,897. In mainland China, the Shanghai Composite (000001.SS) also lost ground, falling 0.48% to 3,234 points.

US stocks closed lower on Friday as banks remained under pressure after a consortium of 11 big US banks banded together to deposit $30bn into First Republic (FRC) in a bid to stabilise the banking system.

The Dow Jones (^DJI) lost 1.20% to 31,860 points. The S&P 500 (^GSPC) tumbled 1.15% to 3,914 points and the tech-heavy NASDAQ (^IXIC) retreated 0.95% to 11,605.

Watch: UBS takeover of Credit Suisse: Embattled bank's chairman describes 'historic, sad and very challenging' day
UBS will take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.
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