Swiss engineer huge unwanted merger

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news Credit Suisse has been sold off at a bargain-basement price.</p><p>There is a deal in Switzerland where their #1 bank UBS will buy their troubled #2 bank, Credit Suisse. It is probably a deal no-one wants however, except the regulator. Their central bank is funding a US$100 bln liquidity support arrangement for the merger in a bid to end the crisis at Credit Suisse. At least 9000 jobs will be cut at Credit Suisse, probably more after the takeover. UBS is said to get their rival for US$2 bln which given their shareholders funds pre-deal were on the books at US$45 bln, the shareholders are all but wiped out getting 5c on the $1. Senior management is all fired and the board dismissed.</p><p>Through this turmoil, investors will continue to monitor the situation in the banking sector this coming week and await monetary policy decisions from major central banks including Fed, BoE, SNB, and Norges Bank. Also, in the spotlight will be inflation figures for Japan, the UK, and Canada. Finally, PMI data for the US, Japan, and Europe should provide some details about the health of the manufacturing and services sector in March.</p><p>In Asia, the People's Bank of China is expected to leave its loan prime rates unchanged following fresh liquidity injections.</p><p>Late on Friday, they <a href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4821841/index.html" target="_blank"><strong>cut their reserve ratio</strong></a> again to induce even more lending. They cut it by -25 bps, the first reduction this year. For its biggest banks it is now 10.75% and its lowest in sixteen years. For smaller institutions it is down to about 7.6%. Rating agencies are probably still <a href="https://www.chinabankingnews.com/2023/03/16/moodys-maintains-negative-outlook-for-chinese-banks-due-to-post