Europe
Prince William thanks Poland for generosity to Ukrainians
Britain's Prince William paid tribute on Thursday to Poles who lost their lives in past wars, and expressed gratitude to the nation for what it is doing today to provide humanitarian and military support to Ukraine.
The heir to the throne's visit to Poland underscores Britain’s support for both Ukraine and Poland, an ally on the front line of efforts to help refugees displaced by Russia’s war and to assist the Ukrainian military in fighting off the invasion.
William laid a wreath in Poland's national colors, white and red, at the Tomb of the Unknown Soldier, and bowed his head solemnly. The memorial honors Poles who lost their lives in wars including World War II, when Polish and British soldiers were allies.
A note on the wreath that he left read: “In memory of those who made the ultimate sacrifice."
He later headed to the presidential palace for a meeting with President Andrzej Duda, who has been a prominent ally of Ukrainian President Volodymyr Zelenskyy since Russia's full-scale invasion of Ukraine more than a year ago. Duda's office said their talks focused on humanitarian aid for Ukraine.
“The Prince of Wales thanked the Poles for their generosity and hospitality,” Duda's office said.
In the final stop on his two-day visit, the prince then went to a trendy food hall where he met with young Ukrainians working or continuing their studies in Poland.
William began his surprise visit Wednesday by meeting with British and Polish troops in Rzeszow, a city of 200,000 people in southeastern Poland that has become a hub for shipments of military and humanitarian aid bound for Ukraine.
“I just wanted to come here in person to say thank you for all that you’re doing, keeping everyone safe out here and keeping an eye on what’s going on,″ William said as he spoke to the troops.
He later traveled to a center in Warsaw that houses about 300 recent arrivals from Ukraine, meeting Ukrainians and playing table tennis with children.
Read more: UK PM Sunak makes surprise trip to Kyiv, boosts defence aid
The U.K. has been one of the most outspoken supporters of bolstering NATO’s eastern flank in the face of Russia’s aggression. The country sent troops to Poland and the Baltic states and provided more than 2.3 billion pounds ($2.8 billion) of military aid to Ukraine. It also has pledged 220 million pounds ($269 million) of humanitarian assistance.
Deploying the popular 40-year-old prince, a military veteran who also worked as a civilian air-sea rescue pilot, offers a more personal touch. While British political leaders have visited Poland regularly to trumpet their support for NATO and the Ukrainian cause, a senior royal like William is a symbol of the nation who can thank military personnel for their service without the baggage of party politics.
Asylum seeker accommodation in UK ‘racialised segregation and de facto detention’: Report
Asylum seekers in the United Kingdom who complain about poor conditions in Home Office assigned hotels were threatened with “being sent to Rwanda,” according to a new report by charity group Refugee Action.
The report, titled “Hostile Accommodation: How the Asylum System Is Cruel By Design”, consists 100 in-depth interviews with asylum seekers conducted in hotels in London, Manchester, the West Midlands, and Bradford, reports The Guardian.
It contains interviews with single persons and families, extensive casework records relating to problems in hotels and other asylum accommodations, and freedom of information (FOI) requests to council environmental health departments.
In addition to being advised not to complain about terrible living conditions or expect deportation to Rwanda, asylum seekers were also told that if they complained about the quality of food supplied to them, police would be contacted.
Read More: EU+ saw 1 million asylum applications, including record 34,000 from Bangladeshis, in 2022
They were also barred from taking photos of the food, it said.
The system of housing asylum seekers, which presently accommodates over 50,000 people, is “a nationwide system of racialised segregation and de facto detention,” said the report.
Asylum seekers are increasingly being kept in hotels for extended periods. One in every three people and one out of every four families with children stays in a hotel for more than a year.
In one example, a family of six lived in a single room for over a year. The report cautioned that if the new immigration bill, now being debated in parliament, is passed, the situation would deteriorate.
Read More: Online system to seek asylum in US is quickly overwhelmed
Individual cases highlighted in the report include a wheelchair user trapped on the 11th floor of a hotel because of a malfunctioning lift and an accommodation contractor who advised a GP not to write a health support letter for an asylum seeker advocating for a transfer because it would put a strain on the contractor’s accommodation system.
Infestations of pests and rodents were prevalent, as were moisture, mildew, and floods. Ceilings have also collapsed resulting in one woman holding a baby and a child being rushed to the hospital in two different occurrences.
“The government is running a system of de facto detention – holding and segregating people seeking asylum in accommodation that is harming their mental and physical health. This demoralising and brutal system costs the taxpayer millions per day but creates huge profits for contractors who are too often failing to make their housing habitable,” said Tim Naor Hilton, chief executive of Refugee Action.
Read More: UNHCR issues non-return advisory for Afghanistan
“We do not recognise the claims in the report suggesting hospitalisations, threats of deportation or restriction of movements, but where concerns are raised about any aspect of the service delivered by the hotel we work with the provider to ensure they are addressed in a timely manner,” a UK Home Office spokesperson said.
World Bank puts cost of rebuilding Ukraine at $411 billion
A World Bank report released Wednesday puts the cost of Ukraine's recovery and rebuilding from Russia's invasion at $411 billion over the next decade, with the cost of cleaning up the war rubble alone at $5 billion.
The report details some of the toll of Russia's war in Ukraine: at least 9,655 civilians confirmed dead, including 461 children; nearly 2 million homes damaged; more than one out of five public health institutions damaged; and 650 ambulances damaged or looted.
In all, the World Bank calculated $135 billion in direct damage to buildings and infrastructure so far, not counting broader economic damage.
The damage would be even worse if not for the strong defense mounted by the Ukrainian forces, Anna Bjerde, the World Bank vice president for Europe and Central Asia, noted in a call with reporters. She said the worst damage has been confined to the front-line regions of Donetsk, Kharkiv, Luhansk and Kherson.
As it is, the World Bank said, Russia's invasion has undone 15 years of economic progress in Ukraine, cutting Ukraine's gross domestic product by 29% and pushing 1.7 million Ukrainians into poverty.
The assessment was carried out by the government of Ukraine, the World Bank Group, the European Commission and the United Nations. The findings are meant to guide planning for financing and carrying out what is an ongoing recovery effort in Ukraine.
The report said it was essential to keep Ukraine's government and private business and recovery efforts going even as bombs fall and fighting persists. Postponing rebuilding and support "risks settling into a situation of low or no growth and facing huge social challenges once the war ends," it said.
Ukraine's energy sector has seen the greatest surge in damage recently, as a result of Russia's targeted strikes on the electrical grid and other energy hubs during the winter. Total damage to the energy sector is now five times greater than it was last summer, the World Bank said.
Longer term, the officials estimated a cost in the trillions of dollars to Ukraine's economy just from the many ways the war has interrupted education. That includes the more than 2 million children estimated to have fled the country.
China and Russia: explaining a long, complicated friendship
Chinese leader Xi Jinping just concluded a three-day visit with Russian President Vladimir Putin, a warm affair in which the two men praised each other and spoke of a profound friendship. It's a high point in a complicated, centuries-long relationship during which the two countries have been both allies and enemies.
Chinese and Russian states have loomed large in each other's foreign affairs since the 17th century, when two empires created a border with a treaty written in Latin.
Neighbors can be good friends, or bitter rivals. Sharing a border of thousands of miles, Beijing and Moscow have been both.
"China and Russia relations have always been uneasy," said Susan Thornton, a former diplomat and a senior fellow at the Paul Tsai China Center at Yale Law School.
"THE SOVIET UNION'S TODAY IS OUR TOMORROW"
The People's Republic of China was founded in 1949, following a brutal Japanese occupation during World War II and a bloody civil war between the Nationalist and Communist Parties.
Russia was part of the Soviet Union, a global superpower, while China was poor, devastated by war and unrecognized by most governments. Communist leader Mao Zedong was junior to Josef Stalin, who led the Soviet Union until his death in 1953.
The early People's Republic depended on the Soviet Union for economic aid and expertise. In 1953, the slogan that appeared in Chinese newspapers was "The Soviet Union's today is our tomorrow." The Soviets sent some 11,000 experts in 1954-58 to help China rebuild after its civil war, according to Joseph Torigian, an associate professor at American University's School of International Service.
The two countries also had a formal military alliance, but Moscow decided against giving China the technology for nuclear arms.
SINO-SOVIET SPLIT
But there were points of friction, especially after the death of Stalin.
In 1956, then-Soviet Premier Nikita Khrushchev condemned Stalin's "cult of personality" in an address to Communist Party members later known as the "secret speech." Mao, who had modeled himself on the former Soviet leader, took it personally.
When Mao decided to shell two outlying islands of Taiwan held by the Nationalist Party he had defeated in the Chinese civil war, he did not warn Khrushchev. Khrushchev saw it as a betrayal of the alliance, Torigian said. In 1959, the Soviet Union remained neutral during a border conflict between China and India, which led China to feel that it was not getting enough support from its ally.
The relationship soured until the two countries broke off their alliance in 1961 in the Sino-Soviet Split.
They quickly became open rivals. Beijing blasted Moscow for "phony communism" and revisionism, or straying from the Marxist path. Soldiers clashed along their borders in China's northeast and the western region of Xinjiang.
US-CHINA-RUSSIA TRIANGLE
The Sino-Soviet Split left Beijing isolated, but set the stage for outreach to the United States. In 1972, the revolutionary communist state welcomed President Richard Nixon for a visit that paved the way for global recognition of Mao's government and for the U.S. and China to enter into a tacit alignment against Moscow.
The 1990s led to a rapprochement between China and Russia after the collapse of the Soviet Union. The two countries formally settled their border disputes.
In the years since, the world has changed greatly, as have the fortunes of the two countries. China is now the world's second-largest economy, while Russia's economy was stagnating long before its invasion of Ukraine last year. Today, it is China facing the U.S. in a strategic competition fueled by intense nationalism on both sides.
Once again, Moscow and Beijing are finding common ground. Under Xi Jinping, "repairing the damage and cultivating the relationship has gone much faster than it has ever before," Thornton, the former diplomat, said.
LEADERS SEE EYE TO EYE
Meanwhile, the similarities between the two leaders, as well as their personal relationship, has helped ties grow.
Both Xi and Vladimir Putin see Western attempts to spread democracy as an attempt to de-legitimize themselves, and they believe that authoritarian regimes are better for confronting the challenges of the modern world. Russia supplies energy and China exports manufactured goods to Russia.
And while some analysts and commentators have started saying that China is now the senior partner in the relationship, given the history, it's not necessarily how that's viewed in China.
Russia's hold over China is not only historical, but also cultural. Students read translated Russian stories and poems in their literature classes, while many educated Chinese of an older generation learned Russian instead of English.
"Many Chinese people, including elites, have not yet realized the historic reversal of China's comprehensive national strength compared to Russia," wrote Feng Yujun, a prominent Russia scholar at Shanghai's Fudan University, in an article published last month that was shared widely. Feng declined to be interviewed.
"Although China's national strength is now ten times that of Russia, the biggest challenge is that many Chinese people are still subservient to Russia ideologically," he wrote.
Russian drones kill 4 at Ukraine dorm, as rival summits end
Russia launched exploding drones that killed at least four people at a student dormitory near Kyiv before dawn Wednesday, just hours after Japan's prime minister left the Ukrainian capital following a show of support for the country. The same day, Chinese leader Xi Jinping left Moscow after discussing his proposal for ending the war, which has been rejected by the West as a non-starter.
A high school and two dormitories were partially destroyed in an overnight drone attack in the city of Rzhyshchiv, south of the Ukrainian capital, local officials said. It wasn't clear how many people were in the dormitories at the time.
The body of a 40-year-old man was pulled from the rubble on a dormitory's fifth floor, according to regional police chief Andrii Nebytov.
More than 20 people were hospitalized, Nebytov said, and a few others were unaccounted for.
Ukrainian air defenses downed 16 of the 21 drones launched by Russia, the Ukraine General Staff said. Eight of them were shot down near the capital, according to the city's military administration. Other drone attacks struck central-western Khmelnytskyi province.
The drone barrage and other Russian overnight attacks that struck civilian infrastructure drew a scathing response from President Volodymyr Zelenskyy, a day after Xi and Russian President Vladimir Putin discussed China's proposals for negotiating an end to the war.
"Over 20 Iranian murderous drones, plus missiles, numerous shelling occasions, and that's just in one last night of Russian terror," Zelenskyy wrote in English on Twitter.
"Every time someone tries to hear the word 'peace' in Moscow, another order is given there for such criminal strikes," he wrote.
Japanese Prime Minister Fumio Kishida, who is the current chair of the Group of Seven countries, made a surprise visit to Kyiv on Tuesday, throwing his support behind Zelenskyy's government as his Asian rival Xi sided with Putin.
After returning to Poland Wednesday morning, Kishida said he had expressed the "unwavering determination of solidarity" of Japan and G-7 to Ukraine during his talks with Zelenskyy.
Kishida's visit to Ukraine was "very meaningful" for Japan's future support for that country, Japan's top government spokesman said Wednesday.
"Through Prime Minister Kishida's visit to Ukraine, Japan was able to show not only to other members of the G-7 but also the international society including the Global South (nations) its determination to defend the rules-based international society," Hirokazu Matsuno said.
Kishida's visit snatched away some of the attention from Xi's trip to Moscow where he promoted Beijing's peace proposal for Ukraine, which Western nations had already dismissed as a way to consolidate Moscow's gains. Xi left Moscow early Wednesday.
The visits by Xi and Kishida, about 800 kilometers (500 miles) apart, highlighted how countries are lining up behind Moscow or Kyiv during the nearly 13-month-old war.
In a joint statement, Russia and China emphasized the need to "respect legitimate security concerns of all countries" to settle the conflict, echoing Moscow's argument that it sent in troops to prevent the U.S. and its NATO allies from turning the country into an anti-Russian bulwark.
Kishida, by contrast, called Russia's invasion a "disgrace that undermines the foundations of the international legal order" and pledged to "continue to support Ukraine until peace is back on the beautiful Ukrainian lands."
Ukraine's finance ministry said Wednesday said it has agreed with the International Monetary Fund on a $15.6 billion loan package aimed at shoring up Kyiv's finances. Russia's invasion has crippled the economy, and Ukrainian officials hope the IMF deal will encourage their allies to provide financial support, too.
For the first time, London’s West End lights up for Ramadan
For the first time in UK, West End district of London has been lit up with 30,000 lights to mark the holy month of Ramadan.
Coventry Street, which links Leicester Square with Piccadilly, is illuminated with "Happy Ramadan”, BBC reports.
London’s Mayor Sadiq Khan, one of the 1.3 million Muslims in the capital of United Kingdom celebrating Ramadan, switched on the lights.
The installation was created by Ayshea Desai, who was motivated by her love of Christmas lights, according to BBC.
Read More: UNICEF launching first large-scale fundraising campaign in Bangladesh this Ramadan
She said: "I just had the ambition to do it like the Christmas lights.”
"I remembered going to visit the Christmas lights with my sister when I was growing up and I also had an opportunity to live in the Middle East and I wanted to bring that joy and magic to London, the city that I'm from," she told BBC.
Desai began the project three years ago.
"It looks incredible, I'm so overwhelmed with the response," she said.
Read More: Muslim authorities say Ramadan fasting to begin Thursday
"I wanted to raise that awareness as well to let our neighbours know that this is a really important month for us, it's my favourite month of the year and I'm just grateful that we're here today."
According to BBC, a public Iftar will be organized at the Victoria and Albert Museum in South Kensington, where a temporary mosque and Ramadan pavilion have been constructed for Muslims and non-Muslims.
Meanwhile, Chelsea football club will also organize open Iftar at the side of the pitch at Stamford Bridge, in what will be a first for the club and a Premier League stadium.
Wembley stadium will do the same later in the month, BBC reported.
Read More: Ministry to sell meat, eggs at lower prices in Dhaka during Ramadan
UK inflation jumps to 10.4%, surprising analysts
Britain’s inflation rate rose for the first time in four months in February, surprising analysts and increasing pressure on the Bank of England to raise interest rates at its meeting on Thursday.
The consumer price index jumped to 10.4% in the 12 months through February from 10.1% the previous month, as high energy prices continued to squeeze household budgets, the Office for National Statistics said Wednesday.
While economists expect prices to drop rapidly later this year, inflation is more than five times higher than the Bank of England’s 2% target.
The central bank will weigh the need to control inflation against concerns about the fallout from global banking troubles when it decides whether to raise interest rates on Thursday. The bank has approved 10 consecutive rate increases since December 2021, pushing its key bank rate to 4%.
Michael Hewson, chief analyst at CMC Markets UK, said he expects the Bank of England to raise rates by at least a quarter of a percentage point.
“A base rate of 4% barely seems adequate to act as a drag on this measure of price rises and will still increase the pressure on the Bank of England” to raise rates on Thursday, Hewson said in a note to clients before the inflation figures were released.
Boris Johnson says 'partygate' untruths were honest mistake
Former UK Prime Minister Boris Johnson acknowledged Tuesday that he misled Parliament about rule-breaking government parties during the coronavirus pandemic — but insisted he never intentionally lied.
Johnson said it never occurred to him that the gatherings — which variously included cake, wine, cheese and a “secret Santa" festive gift exchange — broke the restrictions his own government had imposed on the country.
Britain’s boisterous former leader is set to be grilled by lawmakers on Wednesday over whether he lied when he denied there had been parties in his Downing Street offices in violation of COVID-19 lockdown rules that barred socializing. If found to have lied deliberately, he could be suspended or even lose his seat in Parliament.
In a dossier of written evidence to the House of Commons Committee of Privileges, Johnson acknowledged that “my statements to Parliament that the Rules and Guidance had been followed at all times did not turn out to be correct.”
But he said his statements “were made in good faith and on the basis of what I honestly knew and believed at the time. I did not intentionally or recklessly mislead the House.”
The committee will quiz Johnson in person on Wednesday afternoon about “partygate,” the scandal over a string of gatherings in government offices in 2020 and 2021. Police eventually issued 126 fines over the late-night soirees, boozy parties and “wine time Fridays,” including one to Johnson, and the scandal helped hasten the end of his three years in office.
Revelations about the gatherings sparked anger among Britons who had followed rules imposed to curb the spread of the coronavirus, unable to visit friends and family or even say goodbye to dying relatives in hospitals.
Becky Kummer, spokesperson for the group COVID-19 Bereaved Families for Justice, said Johnson’s claim to have acted in good faith was “sickening.”
“He isn’t fit for public office,” Kummer said.
When reports of the parties first emerged in late 2021, Johnson initially said that no rules had been broken. He later apologized and said there had been “misjudgments.”
But in the 52-page dossier he said he “honestly believed” the five events he attended, including a sendoff for a staffer and his own surprise birthday party, were “lawful work gatherings.”
”No cake was eaten, and no one even sang ‘Happy Birthday,’" he said of the June 19, 2020, celebration, for which he received a police fine. “The primary topic of conversation was the response to COVID-19.”
Johnson said suggestions that people in government considered themselves to be "in a guidance-free bubble where the requirements we imposed on the rest of the country did not apply” could not be further from the truth.
“Drinking wine or exchanging gifts at work and whilst working did not, in my view, turn an otherwise lawful workplace gathering into an unlawful one," he said.
Johnson said he was assured by “trusted advisers” that no rules had been broken — assurances that turned out to be wrong. He said he was later “genuinely shocked” by the rule-breaking uncovered by police and by senior civil servant Sue Gray, who led an investigation into partygate.
Johnson and his supporters have also questioned the impartiality of Gray because she has now accepted a job as chief of staff to the leader of the opposition Labour Party.
If the committee finds Johnson in contempt, it could recommend punishments ranging from an oral apology to suspension or even expulsion from Parliament, or it could recommend no sanction at all. Any punishment would have to be approved by the House of Commons.
Johnson was forced to resign in July after a slew of scandals over money and ethics finally proved too much for Conservative colleagues, dozens of whom quit the government.
For Prime Minister Rishi Sunak, Wednesday's televised hearing will be an unwelcome reminder of the turmoil that engulfed the Conservative government under Johnson — just as the party’s poll ratings are starting to edge upward.
Sunak took office in October, replacing Liz Truss, who stepped down within weeks of becoming prime minister after her tax-cutting budget plans caused turmoil on financial markets.
Johnson, once considered a secret weapon with voters, is now a liability, said Robert Hayward, a polling expert and Conservative member of the House of Lords.
“He is a serious negative for most people," Hayward said. "Boris’s polling is far worse than is the case for Rishi (Sunak).”
Japan, China leaders visit rival capitals in Ukraine war
Japanese Prime Minister Fumio Kishida began a surprise visit to Ukraine early Tuesday, hours after Chinese President Xi Jinping arrived in neighboring Russia for a three-day visit. The dueling summits come as the longtime rivals are on diplomatic offensives.
Kishida will meet President Volodymyr Zelenskyy in the Ukrainian capital.
He will “show respect to the courage and patience of the Ukrainian people who are standing up to defend their homeland under President Zelenskyy’s leadership, and show solidarity and unwavering support for Ukraine as head of Japan and chairman of G-7,” during his visit to Ukraine, the Japanese Foreign Ministry said in announcing his trip to Kyiv.
At the talks, Kishida will show his “absolute rejection of Russia’s one-sided change to the status quo by invasion and force, and to affirm his commitment to defend the rules-based international order,” the ministry’s statement said.
Russian President Vladimir Putin warmly welcomed Xi to the Kremlin on a visit both nations describe as an opportunity to deepen their “no-limits friendship.”
Japanese public television channel NTV showed Kishida riding a train from Poland heading to Kyiv. His surprise trip to Ukraine comes just hours after he met with Indian Prime Minister Narendra Modi in New Delhi, and the week after a breakthrough summit with South Korean President Yoon Suk Yoel.
In New Delhi, Kishida called for developing and Global South countries to raise their voices to defend the rules-based international order and help stop Russia’s war.
Japan, which has territorial disputes over islands with both China and Russia, is particularly concerned about the close relationship between Beijing and Moscow, which have conducted joint military exercises near Japan’s coasts.
Kishida, who is to chair the Group of Seven summit in May, is the only G-7 leader who hasn’t visited Ukraine and was under pressure to do so at home. U.S. President Joe Biden took a similar route to visit Kyiv last month, just before the first anniversary of Russia’s invasion of Ukraine.
Due to limitations of Japan’s pacifist constitution, his trip was arranged secretly. Kishida is Japan’s first postwar leader to enter a war zone. Kishida, invited by Zelenskyy in January to visit Kyiv, was also asked before his trip to India about a rumor of his possible trip at the end of March, denied it and said nothing concrete has been decided.
Read more: Japan PM Kishida heading to Ukraine for talks with Zelenskyy
Japan has joined the United States and European nations in sanctioning Russia over its invasion and providing humanitarian and economic support for Ukraine.
Japan was quick to react because it fears the possible impact of a war in East Asia, where China’s military has grown increasingly assertive and has escalated tensions around self-ruled Taiwan, which Beijing claims as its territory.
Kishida is expected to offer continuing support for Ukraine when he meets with Zelenskyy.
Television footage on NTV showed Kishida getting on a train from the Polish station of Przemysl near the border with Ukraine, with a number of officials.
Due to its pacifist principles, Japan’s support for Ukraine has also been limited to non-combative military equipment such as helmets, bulletproof vests and drones, and humanitarian supplies including generators.
Japan has contributed more than $7 billion to Ukraine, and accepted more than 2,000 displaced Ukrainians and helped them with housing assistance and support for jobs and education, a rare move in a country that is known for its strict immigration policy.
Credit Suisse, UBS shares plunge after takeover announcement
Shares of Credit Suisse plunged 63% in early trading Monday after the announcement that banking giant UBS would buy its troubled rival for almost $3.25 billion in a deal orchestrated by regulators to stave off further market-shaking turmoil in the global banking system.
UBS shares were down 14% in early trading on the Swiss stock exchange.
Swiss authorities urged UBS to take over its smaller rival after a plan for Credit Suisse to borrow up to 50 billion francs ($54 billion) failed to reassure investors and the bank’s customers. Shares of Credit Suisse and other banks plunged after the failure of two banks in the U.S. raised questions about other potentially shaky global financial institutions.
Credit Suisse is among 30 financial institutions known as globally systemically important banks, and authorities worried about the fallout if it were to fail.
The deal was “one of great breadth for the stability of international finance,” Swiss President Alain Berset said as he announced it Sunday night. “An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”
Switzerland’s executive branch, a seven-member governing body that includes Berset, passed an emergency ordinance allowing the merger to go through without shareholder approval.
Markets remain jittery despite the best efforts of regulators to restore calm. Global stock markets sank Monday, with Hong Kong’s main index sliding more than 3%. Market benchmarks in Frankfurt and Paris opened down more than 1%. Shanghai, Tokyo and Sydney also declined. Wall Street futures were off 1%. Oil prices plunged more than $2 per barrel.
Credit Suisse Chairman Axel Lehmann called the sale to UBS “a clear turning point.”
“It is a historic, sad and very challenging day for Credit Suisse, for Switzerland and for the global financial markets,” Lehmann said, adding that the focus is now on the future and on Credit Suisse’s 50,000 employees, 17,000 in Switzerland.
Following news of the Swiss deal, the world’s central banks announced coordinated moves to stabilize banks, including access to a lending facility for banks to borrow U.S. dollars if they need them, a practice widely used during the 2008 crisis. Three months after Lehman Brothers collapsed in September of 2008, such swap lines had been tapped for $580 billion. Swap lines also were rolled out during market turmoil in the early stages of the COVID-19 pandemic.
“Today is one of the most significant days in European banking since 2008, with far-reaching repercussions for the industry,” said Max Georgiou, an analyst at Third Bridge. “These events could alter the course of not only European banking but also the wealth management industry more generally.”
Colm Kelleher, the UBS chairman, hailed “enormous opportunities” from the takeover and highlighted his bank’s “conservative risk culture” — a subtle swipe at Credit Suisse’s reputation for more swashbuckling gambles in search of bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.
UBS officials said they plan to sell off parts of Credit Suisse or reduce the bank’s size.
Swiss Finance Minister Karin Keller-Sutter said the council “regrets that the bank, which was once a model institution in Switzerland and part of our strong location, was able to get into this situation at all.”
The combination of the two biggest and best-known Swiss banks, each with storied histories dating to the mid-19th century, amounts to a thunderclap for Switzerland’s reputation as a global financial center — putting it on the cusp of having a single national banking champion.
The deal follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent further panic.
European Central Bank President Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.”
She reiterated that the European banking sector is resilient, with strong financial reserves and plenty of ready cash. The banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation, she said.
The Swiss government is providing more than 100 billion francs to support the takeover.
As part of the deal, approximately 16 billion francs ($17.3 billion) in Credit Suisse bonds will be wiped out. European bank regulators use a special type of bond designed to provide a capital cushion to banks in times of distress. The bonds are designed to be wiped out if a bank’s capital falls below a certain level, and that was triggered by the government-brokered deal.
That has triggered concern the market for those bonds and for other banks that hold them.
Berset said the Federal Council had been discussing Credit Suisse’s troubles since early this year and held urgent meetings last week.
Investors and banking industry analysts were still digesting the deal, but at least one analyst suggested the deal might tarnish Switzerland’s global banking image.
“A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away,” said Octavio Marenzi, CEO of consulting firm Opimas LLC, in an email.
The Financial Stability Board, an international body that monitors the global financial system, designated Credit Suisse as one of the world’s important banks, meaning that regulators feared a collapse could ripple throughout the financial system like that of Lehman Brothers 15 years ago.
The Credit Suisse parent bank is not part of European Union supervision, but it has entities in several European countries that are.
Credit Suisse’s troubles resurfaced after it reported managers had identified “material weaknesses” in its internal controls on financial reporting. That fanned fears it would be the next domino to fall. Many of its problems are unique and unlike the weaknesses that brought down Silicon Valley Bank and Signature Bank. Their failures led to significant rescue efforts by the Federal Deposit Insurance Corp. and the Federal Reserve to prevent a crisis similar to what occurred in 2008.
Credit Suisse’s shares plunged Wednesday to a record low after its largest investor, the Saudi National Bank, said it wouldn’t invest any more money in the bank to avoid tripping regulations that would kick in if its stake rose about 10%.
On Friday, its shares dropped 8% to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.
UBS is bigger but Credit Suisse still wields considerable influence, with $1.4 trillion assets under management. It has significant trading desks around the world, caters to the rich through its wealth management business, and is a major mergers and acquisitions advisor. The bank did weather the 2008 financial crisis without assistance, unlike UBS.
Credit Suisse is seeking to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.