UBS has agreed to buy Swiss bank Credit Suisse in a historic deal brokered by the Swiss government to restore confidence and avert a crisis that threatens to engulf global markets., reports Bloomberg. The Swiss bank will pay just over two billion dollars for this transaction, people familiar with the matter claim. It is about buying all the shares for a price that is only a fraction of the estimated value of Credit Suisse on Friday, when it was about eight billion euros, Bloomberg adds.

The Swiss National Bank is offering UBS a $100 billion liquidity line, and the Swiss government is providing a guarantee of nine billion francs to absorb potential losses on assets UBS is buying.

Representatives of the two banks declined to comment on the plan, which was agreed hastily in an effort to address the huge drop in Credit Suisse's shares and bonds following the collapse of smaller US lenders. The liquidity protection implemented by the Swiss central bank in the middle of last week failed to end the drama that threatened to overwhelm customers and could have ramifications for the entire banking industry.

US officials are working with their Swiss counterparts because both lenders have operations in the US and are considered systemically important in Switzerland, and authorities have been pushing for a deal before Asian markets open on Monday.

UBS had previously made a billion-dollar offer for Credit Suisse, but the bank rejected that offer.