Investment banking company UBS Group AG finalized a deal to purchase rival Credit Suisse Group AG for $3.25 billion dollars, an agreement brokered with the Swiss government to stabilize the world banking system.

​​“Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome,” Axel Lehmann, chair of Credit Suisse’s board of directors, said in a press release. “This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”

The poor state of Credit Suisse, which has an affiliate based near Baruch College, resulted from numerous scandals, management changes and multi-billion dollar losses. There were multiple speculations over its financial health and whether it could fulfill repayments and loans.

Credit Suisse was involved in several ethically compromising scandals with the U.K. financial services company Greensill Capital and the U.S. hedge fund Archegos Capital, as well as a “tuna bonds” loan scandal with Mozambique. The Switzerland-based company was also involved with money laundering in a cocaine network.

The situation raised alarms when the 167-year-old lender was stagnant for multiple months and sought help from the Swiss government. Credit Suisse said it was experiencing “material weakness” in its financial controls, unable to stem outflows, which made investors wary of the company.

Credit Suisse’s largest investor, Saudi National Bank, was unable to provide funding because of a regulatory cap. The response led shares to decrease by more than 30%.

The Swiss bank’s credit default swaps, a measure of cost insuring against buying its bonds and indicated bond risk, were soaring to a record high, reportedly 18 times more than that of UBS.

Déjà vu of the 2008 banking crisis crossed people’s minds as Credit Suisse, along with prior banking failures ranging from SVB Financial Group — which marked the second largest banking failure in history — to First Republic Bank, left the market jittery.

Concern rose when the financial rating arm of Moody’s Corp. indicated the heightened risk in the U.S. banking system.

Alarms of these banking troubles spreading led European regulators to push Swiss authorities to restore confidence in the bank. But even a $54 billion dollar lifeline could not restore it from its losses.

The Swiss banking giant reached this point due to its forced sell-off of its bonds. This was a result of withdrawals of multiple clients’ money caused by weakened confidence in the institution and Credit Suisse’s lack of liquidity to return the depositors’ and investors’ money.

Higher interest rates have led to the value of bonds dropping. Banks have bought a lot of these bonds, hoping to get a higher return over a longer period of time.

This meant banks used the deposits the customer put in the bank to make these returns. The spike in interest rates meant that the bonds were worth a lot less, which became a problem when banks were forced to sell them to return depositors’ money.

UBS reached an agreement to buy Credit Suisse for $3.25 billion. The bank agreed to take over its rival along with a $100 billion bonus from the Swiss government.

The failure of Credit Suisse became a global issue since it holds multiple foreign assets and is a financial pillar of Switzerland, a country which retains some of the world’s most secretive banking laws.

Whether the acquisition by UBS will calm investors and depositors has yet to be seen as of March 21, but many think it was the best move to be made.

The Swiss Federal Council welcomed the takeover as the “best solution” to restore and strengthen market confidence in Credit Suisse and the Swiss financial center, Swiss President Alain Berset told Deutsche Welle News.

The immediate negotiations and rescue discussion is a result of an effort worldwide to prevent another financial crisis like that of 2008.

Now, the latest banking failures will likely spur a new examination of restrictions on how banks use depositors’ money and repercussions for failing to abide by those rules.