European stock markets opened lower on Monday after clocking their worst week since September 2022 amid volatility in the banking sector.
The pan-European Stoxx 600 index was down 1.4% at 8:30 a.m.m London time, with banks leading losses to plunge 4.8%.
Investors in Europe are digesting the news that UBS has agreed to buy its embattled rival Credit Suisse for 3 billion Swiss francs ($3.2 billion) Sunday. Following the emergency rescue, the combined bank will have $5 trillion of invested assets, according to UBS.
Credit Suisse shares plunged 63% in early trade, while UBS was down 14%.
UBS Chairman Colm Kelleher said over the weekend the acquisition is “attractive” for UBS shareholders but that “as far as Credit Suisse is concerned, this is an emergency rescue.”
“In theory, there is no reason for the Credit Suisse crisis to extend, as what triggered the last quake for Credit Suisse was a confidence crisis – which doesn’t concern UBS – a bank outside of the turmoil, with, in addition, ample liquidity and guarantee from the SNB (Swiss National Bank) and the government,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said in a note quoted by Reuters.
Asia-Pacific markets largely fell on Monday, with eyes firmly on the European banking situation.
U.S. stock futures were mixed.
