GENEVA (AP) — Banking giant UBS is buying its smaller rival Credit Suisse for $3.2 billion in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced Sunday night.

The deal was “one of great breadth for the stability of international finance,” Berset said. “An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”

The Swiss Federal Council, a seven-member governing body that includes Berset, passed an emergency ordinance allowing the merger to go through without the approval of shareholders.

Credit Suisse Chairman Axel Lehmann called the deal “a clear turning point.”

“It is a historic, sad and very challenging day for Credit Suisse, for Switzerland and for the global financial markets,” Lehmann said, adding that the focus is now on the future and in particular on the 50,000 Credit Suisse employees, 17,000 of whom are in Switzerland.

Colm Kelleher, the UBS chairman, hailed the “enormous opportunities” that emerge from the takeover, and highlighted his bank’s “conservative risk culture” — a subtle swipe at a Credit Suisse culture that’s known for more swashbuckling, aggressive gambles on bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.

Swiss Finance Minister Karin Keller-Sutter said the council “regrets that the bank, which was once a model institution in Switzerland and part of our strong location, was able to get into this situation at all.”

The combination of the two biggest and best-known Swiss banks, each with storied histories dating to the mid-19th century, amounts to a thunderclap for Switzerland’s reputation as a global financial center — leaving it on the cusp of having a single national champion in banking.

The deal follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent any further bank panics. Still, global financial markets have been on edge since Credit Suisse’s share price began plummeting this week.

European Central Bank President Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.”

She said the banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation.

While UBS is buying Credit Suisse, UBS officials said they plan to sell off parts of it or reduce the size of the bank in the coming months and years.

The Swiss central bank agreed to loan Credit Suisse up to 50 billion francs ($54 billion) on Thursday, temporarily boosting its shares, but that was not enough to halt the market swings and stem a loss of deposits, according to news reports.

“We noted that the outflows of liquidity and the volatility of the markets demonstrated that necessary confidence could no longer be restored, and a rapid solution guaranteeing stability was essential,” Berset said.

On Sunday, the Swiss central bank said it would provide a loan of 100 billion Swiss francs ($108 billion) backed by a federal default guarantee to support the deal, which is expected to be completed by the end of the year.

A part of the deal, approximately 16 billion francs ($17.3 billion) in Credit Suisse bonds will be wiped out. European bank regulators use a special type of bond designed to provide a capital cushion to banks in times of distress. But these bonds are designed to be wiped out if a bank’s capital falls below a certain level, which was triggered as part of this government-brokered deal.

Berset said the Federal Council had already been discussing a long-troubled situation at Credit Suisse since the beginning of the year and held urgent meetings in the last four days amid spiraling concerns about its financial health that caused major swoons in its stock price and raised the specter of the 2007-08 financial crisis.

Investors and banking industry analysts we`re still digesting the deal, but one analyst was sour on the news due to the reputational damage the deal might have on Switzerland’s global banking image.

“A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away,” said Octavio Marenzi, CEO of consulting firm Opimas LLC, in an email.

Marenzi added he expected Switzerland’s direct democracy governmental model is likely to result in court and ballot challenges for this deal, potential leading to more chaos.

Credit Suisse is designated by the Financial Stability Board, an international body that monitors the global financial system, as one of the world’s important banks. This means regulators believe its uncontrolled failure would lead to ripples throughout the financial system not unlike the collapse of Lehman Brothers 15 years ago.

The Credit Suisse parent bank is not part of European Union supervision, but it has entities in several European countries that are. Lagarde reiterated what she said last week after the central bank raised interest rates — that the European banking sector is resilient, with strong financial reserves and plenty of ready cash.

Many of Credit Suisse’s problems are unique and do not overlap with the weaknesses that brought down Silicon Valley Bank and Signature Bank, whose failures led to a significant rescue effort by the Federal Deposit Insurance Corp. and the Federal Reserve. As a result, their downfall does not necessarily signal the start of a financial crisis similar to what occurred in 2008.

The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn’t invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%.

On Friday, shares dropped 8% to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.

Its current troubles began after Credit Suisse reported on Tuesday that managers had identified “material weaknesses” in the bank’s internal controls on financial reporting as of the end of last year. That fanned fears that Credit Suisse would be the next domino to fall.

While smaller than its Swiss rival UBS, Credit Suisse still wields considerable influence, with $1.4 trillion assets under management. The firm has significant trading desks around the world, caters to the rich and wealthy through its wealth management business, and is a major advisor for global companies in mergers and acquisitions. Notably, Credit Suisse did not need government assistance in 2008 during the financial crisis, while UBS did.

The Swiss bank has been pushing to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.