Good morning,Cracks in the global financial system are expected to bring forward the end of interest rate hikes, with Assistant Treasurer Stephen Jones saying the Albanese government was hopeful UBS’s emergency takeover of troubled lender Credit Suisse would calm jitters in the global economy. After an emergency $4.8bn rescue plan for the trouble-prone Swiss banking giant Credit Suisse amid fears its collapse could trigger another global financial crisis, RBA assistant governor Chris Kent said local financial markets were more volatile but “are still functioning”. Dr Kent said Australian lenders had no funding issues and could weather even a prolonged period of market strain. Mr Jones said “we certainly hope” the rescue deal for Credit Suisse would deliver calm to financial markets after a rollercoaster 10 days roiled bank institutions around the world. UBS chairman Colm Kelleher said it was “a day frankly we hoped would not come”, as he outlined the Credit Suisse takeover after Swiss regulators used emergency powers to “preserve global financial stability”. The tie-up creates a global wealth manager with $US5 trillion of invested assets, but Mr Kelleher said UBS would “de-risk and downsize” Credit Suisse’s trading operations, putting the bulk in a separate non-core division. On the Credit Suisse takeover, sources told The Australian, each UBS business unit would be undertaking a granular assessment of the target’s operations to ascertain which businesses would be retained or ringfenced within the investment bank, which would be partly run down or spun off. Credit Suisse’s circa 100 Australian employees received an internal memorandum about the transaction on Monday, but any detailed information was not yet forthcoming about how the deal would play out here. Staff were told they should continue to work as usual and would receive any scheduled bonus payments on March 24. Several global conference calls were slated to occur on Monday and Tuesday. The Queensland sugar city of Bundaberg, best known for its rich red soil and rum, is now gaining a reputation for something else – a role in bringing down a 166-year-old Swiss bank. The global banking crisis initially sparked by the failure of Silicon Valley Bank has now engulfed Credit Suisse, the Swiss banking giant that for many years bankrolled the activities of one of Bundaberg’s favourite sons Lex Greensill. Some banking insiders say Credit Suisse’s problems had their genesis through its exposure to Greensill – who provided supply chain financing that quickly ballooned to a $US10bn exposure for the investment bank. Greensill built a global financial empire from the frustration of seeing his farming parents waiting months to be paid for their crops. |