Credit Suisse was acquired by rival UBS in a bailout to avoid a wider banking crisis.

Troubled Swiss banking group Credit Suisse is being taken over by rival UBS in a deal worth more than $3bn (£2.65bn).

The shotgun deal was brokered by banking regulators who acted quickly to avoid further turmoil in global money markets amid growing fears that financial troubles at Credit Suisse — a bank considered globally “systemically important” — were reinforcing the contagion that led to billions in losses. affects the value of banks around the world.

Swiss Finance Minister Karin Keller-Sutter said the failure of a major global bank would have “irreparable consequences” for financial markets. The takeover plan “will provide greater stability both in Switzerland and internationally,” she said.

She called it a “commercial decision” and said that Credit Suisse’s insolvency would cause “enormous collateral damage to the Swiss financial market, with the risk of international spread.” “The US and UK were very grateful for this decision. . . They were really afraid that Credit Suisse would go bankrupt,” she added.

Under the terms of the deal, the Swiss National Bank agreed to offer up to £100 billion of liquidity to UBS to facilitate the deal.

The Swiss government is also contributing 9 billion Swiss francs to cover potential losses that UBS could suffer if Credit Suisse’s assets are taken out of the deal if the losses exceed the threshold.

The Swiss central bank said it was forced to act after a CHF50bn (£43bn) emergency loan extended to it last week failed to prevent Credit Suisse’s share price from plummeting as savers quickly fled their transferred funds. The 167-year-old bank is struggling to recover from a series of scandals that have eroded investor and customer confidence.

The Bank of England welcomed the deal, calling it “a comprehensive package of measures by the Swiss authorities to maintain financial stability.”

“We have worked closely with international colleagues in preparation for today’s announcements and will continue to support their implementation. The UK banking system is well capitalized and funded and remains intact and intact,” the statement said.

The UK’s financial regulator, the Financial Conduct Authority, also said it “intended to approve the acquisition” to ensure financial stability, given that both UBS and Credit Suisse operate in London.

FCA continues to work closely with UK and international regulators to monitor market developments.

After the deal was announced, several central banks, including the US Federal Reserve and the Bank of England, announced moves to secure more US dollars to boost liquidity in the global banking sector.

Concerns about the safety of Credit Suisse and larger banks have been exacerbated by growing market turmoil following the sudden collapse of California’s Silicon Valley Bank and New York Signature Bank earlier this month.

Both banks said last week they were opposed to joining, but the terms were heavily influenced by the Swiss central bank.

Swiss authorities are in the process of changing the country’s legislation to bypass a shareholder vote that could take up to six weeks.

Current Credit Suisse shareholders will take a major financial hit, on top of the fact that their share price has fallen by a quarter of what it was last week. When markets closed last week, Credit Suisse was valued at around CHF7.4bn (£6.57bn).

UBS Chairman Colm Kelleher said Credit Suisse is “a very good asset that we really want to keep” but called it “an emergency bailout,” he added. He stressed that the investment banking division of Credit Suisse will be dissolved.

The deal is expected to result in the loss of thousands of jobs, with more than 1,000 people at risk in London, where both banks have significant offices.

Yesterday, the Association of Swiss Bankers called for the creation of a task force to combat the threat of employment. Investment firms and dealers were busy all weekend with interested investors asking for clarification on their deposits.

The UBS president said it was “too early” to talk about what will happen to jobs: “We have to do it rationally and thoughtfully by analyzing what we need to do,” he said.

John Leiper, chief investment officer of Titan Asset Management, said: “This seems like a really unique time, but I don’t think we’re nearing peak volatility.”

Mark Grant, global strategist at Colliers Securities, said private clients and institutions are concerned about where their money is kept. “It’s gotten hot, and it doesn’t look like it’s going to get colder anytime soon. I think this is a time when you have to be very conservative, very thoughtful and calm,” he told Bloomberg.