“UBS buys rival Credit Suisse…”

Banking giant UBS is buying troubled rival Credit Suisse for a reported 3 billion Swiss francs (£2.6 billion), amid fears its collapse would send ripples throughout the global financial system.

Central banks move to prevent crisis after UBS buys rival Credit Suisse

The European Central Bank has joined its US counterpart and central banks from four other countries in a coordinated attempt to calm markets after Swiss bank UBS announced it would buy its rival Credit Suisse for €3 billion.

The banks of England, Japan, Canada, the ECB, the US Federal Reserve and the Swiss National Bank made the announcement on Sunday and said the move would “enhance the provision of liquidity” and allow banks to borrow directly.

The deal will remain in place until at least the end of April and will open a network of swap lines between the banks concerned. The central banks already facilitating transactions in US dollars have agreed to provide 7-day US dollar operations on a daily basis.

The ECB has promised to support eurozone banks with loans if required, mirroring a similar deal that was introduced during the COVID-19 pandemic to lessen the impact on the supply of credit to households and businesses.

In a statement, the President of the European Central Bank said: “I welcome the swift action and the decisions taken by the Swiss authorities. They are instrumental for restoring orderly market conditions and ensuring financial stability”.

“In any case, our policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transition of monetary policy,” Lagarde concluded. 

Meanwhile, UBS will now assume up to €5.7 billion in losses and the deal is expected to close at the end of the year.

The deal follows other efforts in Europe and the US to support the banking sector since the collapse of the US lenders Silicon Valley Bank and Signature Bank.

On Friday European shares recorded their worst week in five months.

French government faces confidence votes over decision to push through pension bill 

The French government will face two confidence votes on Monday in response to President Emmanuel Macron’s decision to bypass the legislature to push through his unpopular pension reform, which will raise the retirement age from 62 to 64.

If the no-confidence votes win a majority of seats, the pension bill would be nullified and Prime Minister Elisabeth Borne would have to resign, forcing President Macron to appoint a new government or call for early elections.

Transport strikes continue today, and a ninth strike day has been proposed by unions for Thursday 23rd.

This is the biggest challenge faced by President Macron’s government since the gilets jaunes protests which began in 2018.

Swedbank receives $82 mln administrative fine over lack of IT control

Swedbank has received an administrative fine of 850 million Swedish crowns ($81.52 million) due to a “lack of internal control” after changing its IT systems last year, Sweden’s bank regulator said in a statement on Wednesday.

Swedbank did not have an immediate comment when contacted by Reuters.

Swedish regulator Finansinspektionen said its investigation showed that Swedbank did not follow internal procedures when changing its system, and that it did not have suitable control mechanisms in place to ensure it followed internal procedures.

On April 28 and 29 last year, an incident occurred after Swedbank changed its IT system, stopping a large number of transactions while almost one million customers had incorrect balances in their accounts, and were unable to make payments.

However, the violation was neither prolonged nor systemic, and Swedbank has since strengthened its internal control, the regulator said.

The EU’s new industrial strategy will aim to have 40% of its green technology homegrown by 2030

The European Union will aim to have 40% of the key technology it needs to combat climate change built within its own borders by 2030.

The goal is the centrepiece of a new strategy designed to boost domestic industry and cut dependencies on foreign suppliers, mainly China, a country that enjoys a vastly comfortable lead in the production of batteries, solar panels and wind turbines.

The strategy is also a response to the Inflation Reduction Act (IRA) passed last year by US President Joe Biden. The IRA includes a $369-billion envelope of tax credits and direct rebates to promote investment in green technology, but only if these products are predominately manufactured in North America.

The generous injection of American money sent Brussels policymakers into a panic, resulting in a new industrial strategy designed in record time.

Competitiveness is the leitmotiv underpinning the latest plans, which were unveiled on Thursday by the European Commission under the name “Net-Zero Industry Act.”

The act identifies eight sectors as being “strategic” for the EU in both the short and long term: solar, wind, batteries, heat pumps and geothermal energy, electrolysers to produce hydrogen, sustainable biogas and biomethane, carbon capture and storage, and power grids.

These “strategic projects” should be granted faster administrative and permitting rules, from 9 to 12 months compared to 12 to 18 months without the special designation. If necessary, these projects could also override considerations of public interest related to environmental protection, a provision environmental NGOs including WWF have already decried.

The selected sectors will also benefit from a set of relaxed subsidy rules unveiled last week.

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