CREDIT SUISSE DEAL AVERTED CRISIS, SWISS CENTRAL BANK SAYS

The Swiss central bank hiked its key interest rate Thursday and declared that a government-orchestrated takeover of troubled Credit Suisse by rival bank UBS ended the financial turmoil.

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In a statement, the Swiss National Bank said it is providing large amounts of support for the deal to merge Switzerland’s biggest banks and that the late Sunday announcement by the federal government, financial regulators and the central bank “put a halt to the crisis.”

“An insolvency of Credit Suisse would have had severe consequences for national and international financial stability and for the Swiss economy,” said Thomas Jordan, chairman of the Swiss central bank’s governing board. “Taking this risk would have been irresponsible.”

The hastily arranged, $3.25 billion deal aimed to stem the upheaval in the global financial system after the collapse of two U.S. banks and jitters about long-running troubles at Credit Suisse led shares of Switzerland’s second-largest bank to tank and customers to pull out their money.

Swiss authorities urged UBS to take over its smaller rival after the central bank’s plan for Credit Suisse to borrow up to 50 billion francs ($54 billion) last week failed to reassure investors and customers. The deal was done after the country’s executive branch passed emergency measures to bypass shareholder approval.