17.04.2023 – 21.04.2023 A Tate Papers A Pine (2)
This week, I intend to present the recent global banking crisis and what central banks have done to build public confidence in the banking industry in order to stabilize the banking industry.
As we all know, on a Sunday in March 2008, the US government met with bankers and finalized negotiations to save Bear Stearns from collapsing as depositors rushed to withdraw their deposits.
Thus, on 16-3-2008, they agreed to forcefully sell a share of Bear Streans Bank to J.P. Morgan Chase at a price of two dollars. In fact, it was sold at a 93% discount to the share value of Bear Streans Bank two days before the purchase.
The transaction was carried out under the guidance of the US Federal Reserve, and the US Treasury Department noted the event as the final journey of an iconic US bank that has been in business for 85 years.
Exactly (15) years after that incident, even the Swiss central bank did not succeed in providing an emergency loan as a guarantee to the bank’s contacts and investors, so the banking regulators and bankers held a meeting and negotiations on 18-3-2023 to sell Credit Suisse Bank. The buyer is another rival bank, UBS Bank. The price was 3 billion Swiss francs (US$3.25 billion). It was sold at a discount of 60% of what it was two days before that day. The transaction was also sponsored by the banking regulatory authorities.
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