The Swiss government has brokered a deal aimed at preventing a further decline in confidence in the banking system. The deal, which involves two major players in Swiss finance, represents the first mega-merger of systemically important global banks since the 2008 financial crisis.

Founded in 1856 to finance the Swiss railway system, Credit Suisse has risen to the highest levels of finance and has historically competed with American giants such as JPMorgan Chase. But the Zurich-based bank has been marred by decades of scandals, management turmoil and failed restructuring attempts that have damaged its image, sparked lawsuits and left it reeling from losses. Moreover, the recent plunge in bank stocks, triggered by the collapse of Silicon Valley Bank this month, accelerated its fall.

The deal with UBS comes just months after the Saudi National Bank and the Qatar Investment Authority injected nearly CHF 3 billion into Credit Suisse as part of a CHF 4 billion fundraiser in December. They are the bank's two largest shareholders and together own 17% of the shares. Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares, or $0.82 per share, less than half the Credit Suisse share price of $2.01 at Friday's market close.

The merger is expected to create a company with total invested assets in excess of USD 5 trillion. The Swiss government has also announced that it will provide more than USD 9 billion to support UBS in absorbing potential losses at Credit Suisse. In addition, the Swiss National Bank has provided more than USD 100 billion of liquidity to UBS to facilitate the transaction.

UBS shares were up 5% this afternoon after falling 14% in early trading today.