European stock markets lost no time in delivering their verdict on the forced merger between UBS and Credit Suisse: it sucks.
Credit Suisse shares collapsed by 60% at around 9:05 a.m. London time (5:05 a.m. ET), while UBS traded 10% lower.
Europe’s banking index was down nearly 2% around the same time, with lenders including ING, Deutsche Bank and Barclays all falling over 4%.
Investors across the board have concluded the obvious: the bank merger solved nothing.
Investors and strategists say the turmoil in global financial markets still has room to run even after UBS Group AG’s agreement to take over of Credit Suisse Group AG, and the announcement of new dollar liquidity measures among central banks.
However, the banks and the regulators still have not addressed the core problem: underwater investments. Until they do, this crisis will continue to spread.
And for the most unsurprising news of the day, the holders of Credit Suisse AT1 bonds are miffed that they got wiped out while the stockholders did not.
https://archive.md/EUlE5
Normally bondholders come ahead of stockholders.
With a mouse click the Swiss regulator FinMa managed to throw shade on the entire $275 Billion market in AT1 bonds.
And they wonder why these shotgun weddings don't solve anything.
Yikes, just yikes.