Banking giant UBS has agreed to buy its struggling smaller rival Credit Suisse, in a move aimed at easing fears of a global financial crisis.

Credit Suisse stocks have fallen by about 30 per cent in recent weeks, leading to the Swiss government seeking to broker a purchase deal.

UBS is believed to be buying the bank for about $3 billion, but just 38 hours ago, Credit Suisse was valued at $10 billion.

UBS is set to take over the struggling Credit Suisse. (AP)

The Swiss government will try to bypass laws that would see the deal go to a shareholder vote, hoping to avoid a knock-on effect when the stock market opens in the US and Europe in about 24 hours.

But the Australian Stock Exchange is set to be one of the first in the world to respond to the news when it opens this morning.

Credit Suisse is designated by the Financial Stability Board, an international body that monitors the global financial system, as one of the world’s globally systemic 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 167-year-old Credit Suisse already received a $74 billion loan from the Swiss National Bank, which briefly caused a rally in the bank’s stock price.

Yet the move did not appear to be enough to stem an outflow of deposits, according to news reports.

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Still, many of Credit Suisse’s problems are unique and do not overlap with the weaknesses that recently brought down US institutions Silicon Valley Bank and Signature Bank, whose failures led to a significant rescue effort by the Federal Deposit Insurance Corporation and the US Federal Reserve.

As a result, their downfall does not necessarily signal the start of a financial crisis similar to what occurred in 2008.

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