The stock market opened lower today despite the Bank of England rushing to reassure investors after the dramatic rescue of Credit Suisse.
The FTSE 100 index dropped more than 1 per cent after opening, to its lowest level since early November - with traders braces for another tense day.
Switzerland's second biggest lender was bought by rival UBS in a sensational shotgun wedding of two of Switzerland's most established financial institutions last night.
The tie-up managed to avert an 'unthinkable' catastrophic collapse of Credit Suisse, with fears that could have triggered the worst crisis since the 2008 Credit Crunch.
The Bank of England confirmed it had been 'engaging closely with international counterparts' before the takeover and vowed that the UK will weather the storm.
'The UK banking system is well capitalised and funded, and remains safe and sound,' Threadneedle Street said.
The takeover follows extraordinary volatility in bank shares in the wake of the collapse of Silicon Valley Bank in the US.
That had been exposed as overstretched when central bank interest rates started rising around the world in response to soaring inflation.
The FTSE 100 index dropped more than 1 per cent after opening, to its lowest level since early November - with traders braces for another tense day
Thousands of jobs are now at risk in the UK.
The Swiss banks employ more than 11,000 staff in the City of London and Canary Wharf.
As one of the world's 30 'systemically important' banks, Credit Suisse is considered large enough that its failure would lead to wider financial problems.
Reports suggest last night's bailout is thought to have cost $2billion (£1.64billion) - although some reports suggest it was as high as $2.6billion.
The deal capped a torrid week for Credit Suisse which saw shares fall by more than any time since the outbreak of Covid - even after being thrown a £45billion lifeline by the Swiss authorities.
Markets in Asia were struggling earlier in the morning, with shares in Hong Kong falling by more than 3 per cent as the banking sector took a battering.
'With Credit Suisse shareholders and some bondholders taking a huge hit, banks in Asia have taken a hit on similar concerns about (some of their) bond-holding values,' said Michael Hewson, chief market analyst at CMC Markets.
'While the weekend deal still presents the Swiss National Bank and Swiss Government with untold headaches, with the size of the newly merged bank set to dwarf the size of the Swiss economy.
'The phrase too big to fail really does spring to mind here, and this morning's weakness in Asia markets serves to reinforce concerns about these types of writedowns and any spillover effects on the rest of the banking sector.'
The whole banking sector has been shaken by the collapse of US-based lenders Silicon Valley Bank, Silvergate and Signature Bank.
Alain Berset, President of the Swiss Confederation, said 'unthinkable consequences for Switzerland and the world' had Credit Suisse been allowed to fail, after it 'lost the confidence of the market'
At a hastily arranged conference in Switzerland's capital Bern last night, Mr Berset said: 'Credit Suisse is one of two major banks in the country.
'Its destiny is not only decisive for Switzerland's businesses and its private customers and employees - but essential for the stability of the whole in financial sector.'
Swiss bank UBS has taken over troubled rival Credit Suisse for a reported $2bn
Urgent talks had been taking place for days on how to handle the crisis at Credit Suisse
He said the bank had been a 'source of concern' for a few months and the tie up was the 'best solution' for restoring confidence to financial markets. If you loved this article and you would such as to get more info regarding news kindly see our internet site.
The final deal is believed to value Credit Suisse at up to £1.6billion, which is a fraction of its value at the end of last week.