Relief over Credit Suisse deal crumbles as major banks left scrambling

The shotgun Swiss banking marriage is backed by a massive government guarantee, helping prevent what would have been one of the largest banking collapses since the fall of Lehman Brothers in 2008

The European Central Bank vowed to support eurozone banks with loans if needed, adding the Swiss rescue of Credit Suisse was 'instrumental' in restoring calm. Picture: Yui Mok/PA Wire

Banking stocks tumbled on Monday as initial relief over a historic state-backed rescue of troubled lender Credit Suisse by Swiss rival UBS Group gave way to new worries about the risks of high-yield debt issued by big banks.

In a package orchestrated by Swiss regulators on Sunday, UBS Group AG (UBSG.S) will pay 3bn Swiss francs (€3.03bn) for 167-year-old Credit Suisse Group AG (CSGN.S) and assume up to €5.7bn in losses.