UBS, Switzerland’s largest bank, has agreed to acquire its troubled rival Credit Suisse for almost $3.25 billion in a deal brokered by Swiss regulators to avoid further turmoil in the global banking system.

The acquisition was sanctioned by the Swiss authorities following the failure of the central bank to convince customers and investors of the bank’s future and viability despite injecting $54 billion into it last week.

Despite the new agreement reached between the two largest banks in Switzerland, the shares of Credit Suisse plummeted by 159.13% to 0.76 CHF on Monday while UBS shares lost 5.11% to 16.24 CHF as at the time of writing. The declines highlighted investors concerns especially when it comes to global banking system.

As part of the agreement, Credit Suisse’s high-risk bonds estimated at $17.3 billion will be wiped out. Credit Suisse is among 30 financial institutions known as globally systemically important banks, and authorities were worried about the fallout if it were to fail.

While analysts and financial leaders have suggested that safeguards are stronger since the 2008 global financial crisis and that banks worldwide have plenty of available cash and support from central banks, concerns about the risks to the deal, losses for some investors, and Credit Suisse’s falling market value could renew fears about the health of banks.

The acquisition is a significant turning point for Credit Suisse, which has faced an array of troubles in recent years, including bad bets on hedge funds, repeated shake-ups of its top management, and a spying scandal involving UBS.

UBS is bigger, but Credit Suisse 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. Credit Suisse did weather the 2008 financial crisis without assistance, unlike UBS.

The combination of the two largest and best-known Swiss banks, each with storied histories dating to the mid-19th century, puts Switzerland’s reputation as a global financial center on the cusp of having a single national banking champion. However, the shotgun wedding orchestrated by Swiss regulators may lead to a period of uncertainty and volatility in the banking sector.

SVB Financial Group‘s recent failure has been making headlines as the largest bank to fail since the 2008 financial crisis. The reason for SVB’s failure was a $1.8 billion loss on a bond portfolio.

The tech-focused lender had attempted to raise $2.25 billion through a stock sale, but the capital raise was unsuccessful, leading to depositors fleeing and investors worrying that SVB would require even more capital.

Investors King understands that in an attempt to recover some of the loss, SVB sold the bond portfolio to Goldman Sachs Group Inc on March 8. The portfolio, consisting mostly of U.S. Treasuries, had a book value of $23.97 billion, and was sold to Goldman Sachs at negotiated prices, netting SVB $21.45 billion in proceeds.

Goldman Sachs’ purchase of the bond portfolio was handled by a separate division from the unit that handled SVB’s stock sale, according to a source familiar with the matter. This arrangement is typical in major banks to avoid conflicts of interest.

While SVB suffered a significant loss, Goldman Sachs gained a profitable bond portfolio. The purchase of the bond portfolio highlights the potential gains that can be made from distressed assets.

In this case, Goldman Sachs was able to acquire a large bond portfolio at a negotiated price, which could potentially yield significant profits in the future.

The Central Bank of Nigeria, CBN has officially declared its alliance with the Supreme Court judgement on the recirculation of the old N500 and N1000 notes as legal tender.

The apex bank, in a statement signed by the Acting Director of Corporate Communications, Isa AbdulMumin on Monday, directed banks to uphold the validity of the old notes as pronounced by Nigeria’s highest court.

Investors King had earlier reported that on March 3, 2023, the Supreme Court ruled that the old naira notes remain as legal tender till December 31, 2023. However, Nigerians became confused when their banks rejected the old naira notes telling them that CBN is yet to issue a directive on the matter.

The CBN’s directive came after President Muhammadu Buhari criticised the CBN Governor Godwin Emefiele and Attorney-General of the Federation (AGF) Abubakar Malami (SAN) for opposing the court judgement.

The President had said Emefiele has no excuse to disobey the supreme court saying that the CBN need not expect the president’s directive on the matter before complying with the ruling.

Buhari debunked the notion that he directed CBN governor and the Attorney-General to disobey the court order, reiterating his belief in democracy and prevalence of the rule of law.

The statement by the presidency read, “Since the President was sworn into office in 2015, he has never directed anybody to defy court orders, in the strong belief that we can’t practise democracy without the rule of law and the commitment of his administration to this principle has not changed.

“Following the ongoing intense debate about the compliance concerning the legality of the old currency notes, the Presidency, therefore, wishes to state clearly that President Buhari has not done anything knowingly and deliberately to interfere with or obstruct the administration of justice.

“The President is not a micromanager and will not, therefore, stop the Attorney General and the CBN governor from performing the details of their duties in accordance with the law. The directive of the President, following the meeting of the Council of State, is that the bank must make available for circulation all the money that is needed and nothing has happened to change the position.

After the open rebuke and dissociation on the naira saga by President Buhari, the CBN sent a directive to the commercial banks and alerted the citizens of its acceptance of the supreme court order after the long silence.

The CBN statement read, “In compliance with the established tradition of obedience to court orders and sustenance of the rule of law principle that characterised the government of President Muhammadu Buhari, and by extension the operations of the Central Bank of Nigeria (CBN), as a regulator, Deposit Money Banks operating in Nigeria have been directed to comply with the Supreme Court ruling of March 3, 2023.

“Accordingly, the CBN met with the Bankers’ Committee and has directed that the old N200, N500 and N1000 banknotes remain legal tender alongside the redesigned banknotes till December 31, 2023. Consequently, all concerned are directed to conform accordingly.”