Switzerland’s largest bank, UBS, agreed on Sunday to buy its beleaguered and longtime rival Credit Suisse for about $3.2 billion, the most drastic bid yet to arrest the financial panic that has swept the globe over the past week.

Iran PressEurope: Switzerland’s largest bank, UBS, has agreed to buy Credit Suisse for 3 billion Swiss francs ($3.24bn), officials from the banks have said, in a deal designed to contain a widening crisis of confidence in global finance.

The agreement, announced late on Sunday, includes 100 billion francs ($108bn) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank.“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss central bank said.

To enable UBS to take over Credit Suisse, the federal government is providing a loss guarantee of a maximum of 9 billion francs ($9.7bn) for a clearly defined part of the portfolio, the government said.

This will be activated if losses are actually incurred on this portfolio. In that eventuality, UBS would assume the first 5 billion francs ($5.4bn), the federal government the next 9 billion francs ($9.7bn), and UBS would assume any further losses, the government said.

The deal, hastily brokered over the course of a few days by the Swiss government, signifies the stunning fall of a 166-year-old institution that was once an emblem of Swiss pride. It is perhaps the most sweeping shake-up of the global banking sector since the 2008 financial crisis, when onetime financial giants were acquired by rivals to avoid catastrophic meltdowns. 219