Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal.

Sunday evening’s announcement came after a weekend of emergency talks in Switzerland between the two banks and the country’s financial regulators.

The Swiss National Bank said the deal was the best way to restore the confidence of financial markets and to manage risks to the economy.

Both banks will be given a liquidity assistance loan of up to $110bn.

The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn (£7.9bn).

Regulators had hoped to facilitate a deal before markets reopened on Monday.

There has been no word yet from the Bank of England or the Treasury which have been monitoring the situation.