Credit Suisse shares tumble 55% as its UBS rescue deal fails to calm bank-crisis jitters

• Credit Suisse shares fell almost 55% Monday after UBS agreed to buy the lender for $3.2 billion.
• Swiss authorities drove the takeover to try to stop Credit Suisse's troubles spreading to other banks.

Credit Suisse shares fell over 50% Monday, as European bank stocks recouped losses, after UBS agreed to take over the beleaguered Swiss banking giant.

UBS on Sunday said it plans to buy embattled Credit Suisse in a deal valued at 3 billion Swiss francs ($3.2 billion), which will see it take on up to $5.4 billion in its former rival's losses. The move was orchestrated by Swiss regulators, the latest in government efforts around the world to stave off a brewing bank crisis.

Zurich-listed shares in Credit Suisse tumbled 54.3% to 0.85 Swiss francs ($0.92) at last check, dropping as much as 60% in premarket trading. US-listed shares in the financial giant were 53.2% lower at $0.94.

Meanwhile, UBS shares were up 3.4% in Zurich to 17.70 Swiss francs, after falling as much as 16% in premarket trading. The US-listed stock was 4.3% higher at $18.92, having fallen in premarket trading.

Shareholders in Credit Suisse face big losses, with its acquisition price pegged at 99% below its peak in 2007, according to Bloomberg. Holders of Credit Suisse's AT1 bonds will also take a hit, as they are being written down after the Swiss regulator decided to reduce their value from 16 billion Swiss francs ($17.2 billion) to zero.

AT1 bonds were created after the Global Financial Crisis of 2007 to 2009 to pass the risks from crises onto investors rather than onto taxpayers.

More broadly, European banking stocks edged higher, after falling earlier Monday as investors worried about the long-term fallout for the sector from the Credit Suisse rescue deal. An index of banks on the STOXX 600 was up 0.24% at last check, after sliding over 1% earlier.

Investors appear to not yet be convinced that official interventions to fend off a market meltdown in banks are paying off. The Swiss National Bank's lifeline offer of a $54 billion loan Thursday wasn't enough to calm fears about Credit Suisse, reflecting potentially heavy pressure on its deposits.

The past couple of weeks have been a turbulent time for the global banking sector, after Silicon Valley Bank, Signature Bank, and Silvergate Capital all folded in recent days.