Europe

Credit Suisse and UBS could benefit from more than 260 billion Swiss francs ($280 billion) in state and central bank support, a third of the country's gross domestic product, as part of their merger to buffer Switzerland against global financial turmoil, documents outlining the deal show, Reuters reported. Swiss authorities announced on Sunday that UBS had agreed to buy rival Swiss bank Credit Suisse in a shotgun merger aimed at avoiding more market-shaking turmoil in global banking.

The Bank of England sought to clarify its rules regarding the order in which shareholders and creditors should bear losses in the event of insolvency, in the wake of the controversial write-down of Credit Suisse Group AG’s riskiest bonds, Bloomberg News reported. The central bank said in a statement on Monday that additional tier 1 instruments, the securities rendered worthless as part of the UBS Group AG takeover, rank ahead of common equity tier 1 (CET1) and behind tier 2 (T2), a mix of reserves, hybrid instruments and junior debt.

The European banking system is well-equipped with capital and the probability of contagion due "very small", ECB's policymaker Yannis Stournaras said on Monday. "We don't see substantial vulnerabilities. So, the probability of contagion is very small today. The banks are well capitalised," Greek central bank chief Stournaras said. Stournaras added that Europe has all the instruments ready, if needed, to intervene.

German retirees' pensions will rise significantly this summer for the second consecutive year, the government said Monday, though the increase will still fall short of the current inflation rate, the Associated Press reported. The Labor Ministry said pensions will increase by 4.39% in the former West Germany on July 1 and by 5.86% in the formerly communist east. That will follow increases last year of 5.35% in the west and 6.12% in the east. Rises in German pensions are linked largely to wage developments.

Some of the world's largest central banks came together on Sunday to stop a banking crisis from spreading as Swiss authorities persuaded UBS Group AG on Sunday to buy rival Credit Suisse Group AG in a historic deal, Reuters reported. UBS will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023. Soon after the announcement late on Sunday, the U.S.

At least two major banks in Europe are examining scenarios of contagion in the region's banking sector and are looking to the Federal Reserve and the ECB for stronger signals of support, two senior executives close to the discussions told Reuters. The fallout from the crisis of confidence in Credit Suisse Group AG and the failure of two U.S. banks could ripple through the financial system next week, the two executives separately told Reuters on Sunday.

Virgin Orbit has begun drawing up detailed contingency plans for its insolvency days after halting its operations and furloughing its workforce, SkyNews.com. Sky News has learned that the commercial space satellite venture founded by Sir Richard Branson's Virgin Group is working with Alvarez & Marsal (A&M) and Ducera, two restructuring firms, on fallback plans in the event that it cannot secure new funding.

Credit Suisse said today that it would borrow up to $54 billion from Switzerland's central bank to shore up liquidity and investor confidence, after a slump in its shares had intensified fears about a global banking crisis, Reuters reported. The bank's announcement prompted a 24% rise in Credit Suisse shares and helped reverse some of the heavy losses on stock markets driven by investor fears over potential bank runs across the world.

The European Central Bank went ahead with a planned half-point increase in interest rates but offered few clues on what may follow amid market turmoil that roiled Credit Suisse Group AG, Bloomberg News reported. The deposit rate was lifted to 3% on Thursday — as officials have been flagging since their last meeting six weeks ago and as the majority of economists anticipated, but dropped language from its statement indicating where borrowing costs are headed.

Ukraine's central bank said on Thursday it would keep its main interest rate steady at 25% as inflation remained high so far this year, Reuters reported. The bank has kept the interest rate at 25% since June 2022 as it sought to keep inflation under control following Russia's large-scale invasion, which has disrupted supply chains and battered the economy.