Chairman Axel Lehmann said the merger represents the "best available outcome."
UBS will take over its troubled Swiss rival Credit Suisse for $3.25 billion following crunch talks Sunday aimed at stopping the stricken bank from triggering a wider international banking crisis.
The government said the deal involving Switzerland's biggest bank taking over the second-largest, was vital to prevent irreparable economic turmoil spreading throughout the country and beyond.
The move was welcomed in Washington, Brussels and London as one that would support financial stability.
After a dramatic day of talks at the finance ministry in the capital Bern -- and with the clock ticking ahead of the markets opening on Monday in Asia and then in Europe -- the takeover details were announced at a press conference.
Swiss President Alain Berset was flanked by UBS chairman Colm Kelleher and his Credit Suisse counterpart Axel Lehmann, along with the Swiss finance minister and the heads of the Swiss National Bank (SNB) central bank and the financial regulator FINMA.
The wealthy Alpine nation is famed for its banking prominence and Berset said the takeover was the "best solution for restoring the confidence that has been lacking in the financial markets recently".
If Credit Suisse went into freefall, it would have had "incalculable consequences for the country and for international financial stability", he said.
Credit Suisse said in a statement that UBS would take it over for "a merger consideration of three billion Swiss francs ($3.25 billion)", with Credit Suisse shareholders receiving one UBS share for 22.48 Credit Suisse shares.
"Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome," Lehmann said.
'Huge collateral damage' risk
Finance Minister Karin Keller-Sutter said that bankruptcy for Credit Suisse could have caused "irreparable economic turmoil" and "huge collateral damage" for the Swiss financial market, not to mention the "risk of contagion" for other banks, including UBS itself.
The takeover has "laid the foundation for greater stability both in Switzerland and internationally", she said.
The deal was warmly received internationally, with European Central Bank chief Christine Lagarde welcoming the "swift action".
The decisions taken in Bern "are instrumental for restoring orderly market conditions and ensuring financial stability. The euro area banking sector is resilient, with strong capital and liquidity positions", she said.
Fed chair Jerome Powell and Treasury Secretary Janet Yellen said in a joint statement: "We welcome the announcements by the Swiss authorities today to support financial stability."
Britain too said the deal would "support financial stability".
Keller-Sutter said her US and British colleagues "really feared that there could be a bankruptcy of Credit Suisse, with all the losses".
The SNB announced that 100 billion Swiss francs of liquidity would be available.
Keller-Sutter insisted the deal was "a commercial solution and not a bailout."
UBS chairman Kelleher added: "We are committed to making this deal a great success.
"This is absolutely essential to the financial structure of Switzerland.
"UBS will remain rock solid," he insisted.
Too big to fail?
Like UBS, Credit Suisse was one of 30 banks around the world deemed to be Global Systemically Important Banks -- of such importance to the international banking system that they are considered too big to fail.
But the market movement seemed to suggest the bank was being perceived as a weak link in the chain.
Amid fears of contagion after the collapse of two US banks, Credit Suisse's share price had plunged by more than 30 percent on Wednesday to a new record low of 1.55 Swiss francs. That saw the SNB step in overnight with a $54-billion lifeline.
After recovering some ground Thursday, its shares closed down eight percent on Friday at 1.86 Swiss francs as the Zurich-based lender struggled to retain investor confidence.
In 2022, the bank suffered a net loss of $7.9 billion and expects a "substantial" pre-tax loss this year.
A UBS statement said Credit Suisse shareholders would get 0.76 Swiss francs per share.
After suffering heavy falls on the stock market last week, Credit Suisse's share price closed Friday at 1.86 Swiss francs, with the bank worth just over $8.7 billion.
Credit Suisse's share price has tumbled from 12.78 Swiss francs in February 2021 due to a string of scandals that it has been unable to shake off.
The Swiss Bank Employees Association said there was "a great deal at stake" for the 17,000 Credit Suisse staff, "and therefore also for our economy".
In addition, tens of thousands of jobs outside of the banking industry were potentially be at risk, it added.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
