(New: including current rates and EU banking supervisors and finance ministry)

ZURICH/FRANKFURT (dpa-AFX) - After the "emergency rescue" of Credit Suisse by the major Swiss bank UBS, the financial markets worldwide are not calming down. Both the billion-dollar deal in Switzerland and the measures taken by several central banks to provide liquidity to the financial system could initially do little to counter fears of a continuing banking crisis on Monday.

In particular, the looming total default of certain multi-billion bonds of the major Swiss bank weighed heavily in part on the strongly fluctuating prices of banks and insurers. As a result, numerous sector stocks in Asia came under pressure. However, the stock exchanges in Europe shook off their initially significant losses by midday. The Dax, which had started weakly, also worked its way into the profit zone by Monday afternoon.

European Union banking supervisors stressed the stability of the banking market. "The European banking sector is resilient and has solid levels of capital and liquidity," the European Central Bank's (ECB) banking regulator, the European Bank Resolution Fund (SRB) and the European Banking Authority (EBA) said. The German government also reiterated the stability of the German financial system.

UBS is taking over its smaller local rival for three billion francs (just over 3 billion euros). In addition, it is liable for losses of up to five billion francs. In addition, there is a state loss guarantee of 9 billion francs and liquidity commitments of up to 200 billion francs.

The Swiss National Bank (SNB) is supporting the transaction with liquidity assistance and is granting the banks a loan of up to 100 billion francs. In addition, the SNB could grant Credit Suisse a liquidity support loan of up to 100 billion francs secured by a default guarantee from the Swiss government. The Swiss government secured a CHF 9 billion guarantee for UBS. Other central banks welcomed the measures.

A takeover of Credit Suisse, Switzerland's second-largest bank, by the larger UBS is the most significant bank merger in Europe since the financial crisis 15 years ago. It spells the end for 167-year-old Credit Suisse, whose headquarters are across the street from bitter rival UBS on Zurich's Paradeplatz.

The Swiss government in Bern has been under considerable pressure to stabilize the situation and prop up Credit Suisse. After all, Credit Suisse is one of the world's largest asset managers and is one of the 30 global systemically important banks whose failure would shake the international financial system.

Swiss President Alain Berset said "the Federal Council is convinced that the takeover is the best solution to restore confidence." The transaction is important for the stability of the Swiss financial center, it said. SNB President Thomas Jordan stressed that reputation is central to Switzerland's economy. Finance Minister Karin Keller-Suter said the federal government gave the CHF 9 billion guarantee to cushion Credit Suisse risks. "Taxpayers have little risk" - any other scenario would have cost more.

UBS Chairman Colm Kelleher called it a huge opportunity for UBS. Swiss financial market regulator Finma welcomed the takeover solution and the measures taken by the federal government and the Swiss National Bank (SNB). Credit Suisse had been at risk of insolvency, even though the bank remained solvent, it added.

Credit Suisse had recently suffered from a significant loss of investor confidence. Its share price had fallen to a record low after the bank's largest investor ruled out providing further capital and the institution continued to struggle with cash outflows.

The merger to create a new industry giant is expected to create a financial institution with more than $5 trillion in assets under management, according to UBS. UBS, with more than 72,000 employees, had total assets equivalent to 1,030 billion euros in 2022, while Credit Suisse, with just over 50,000 employees, had total assets equivalent to 535.44 billion euros. UBS had made a profit of $7.6 billion (currently 7.07 billion euros) in 2022. Credit Suisse, on the other hand, reported a loss of 7.3 billion francs (7.4 billion euros)./mrd/oe/stw/nas/DP/ngu