European banking shares drop after Credit Suisse takeover

European bank shares have dropped sharply after troubled bank Credit Suisse was rescued in a $3bn purchase by its Swiss rival UBS, the BBC reports.

UBS, which purchased Credit Suisse for a fraction of its value on Friday in a government-backed deal, is down 13%.

Share prices in Asia fell earlier – with Hong Kong’s Hang Seng index dropping by about 3% and the Nikkei in Tokyo more than 1% down.

Credit Suisse was the most significant failure of a crisis of confidence in the banking sector that also saw the collapse of Silicon Valley Bank in the US.

Switzerland’s second biggest lender was seen as a bank that was too important to fail – meaning the takeover was rushed through by the the country’s authorities.

Despite market turmoil in recent weeks, experts are not forecasting a repeat of the 2008 financial crisis.

The Bank of England says the UK banking system is “well capitalized and funded, and remains safe and sound.”

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