The world's five biggest central banks, including the European Central Bank, have agreed to provide additional layers of funding to the financial system as markets brace themselves for any fallout from a deal struck last night to rescue Credit Suisse.

The beleaguered lender has been bought over by rival Swiss bank UBS.

UBS, a major Swiss bank, is chaired by Cork native Colm Kelleher.

It bought out its rival Credit Suisse in a deal worth just over €3 billion with the support – and possibly persuasion - of the Swiss central bank.

The Swiss National Bank is also supporting the forced marriage of two of the country’s biggest banks with the provision of 100 billion Swiss francs in financial assistance.

The ECB, along with the US Federal Reserve, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank itself announced they would open co-ordinated credit lines in US dollars to ensure that banks around the world will have access to funding.

The last time this happened was at the start of the pandemic three years ago.

Shares in Credit Suisse collapsed last week in the wake of the turmoil on financial markets which followed the failure of US lender Silicon Valley Bank.

Despite $54 billion in emergency funding from Swiss authorities, Credit Suisse shares continued to lose value on Friday.

In a statement, the President of ECB Christine Lagarde welcomed the deal.

"The euro area banking sector is resilient, with strong capital and liquidity positions," the ECB President said.

"In any case, our policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy."

Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen said they welcomed the announcement by the Swiss authorities.

The Bank of England also welcomed moves by Swiss authorities.

Some investors welcomed the steps taken over the weekend but took a cautious stance.

"Provided markets don't sniff out other lingering problems, I’d think this should be pretty positive," said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

Problems remain in the U.S. banking sector, where bank stocks remained under pressure despite a move by several large banks to deposit $30 billion into First Republic Bank, an institution rocked by the failures of Silicon Valley and Signature Bank.

On Sunday, S&P lowered First Republic Bank’s credit rating to B+ from BB+.

It was not yet clear if the Swiss deal is enough to restore trust in lenders around the world.

The intervention comes after two sources told Reuters earlier on Sunday that major banks in Europe were looking to the Fed and ECB to step in with stronger signals of support to stem contagion.

The euro, the pound and the Australian dollar all rose by around 0.4% against the greenback, indicating a degree of risk appetite in markets.

UBS Chair Colm Kelleher said during a press conference that it will wind down Credit Suisse's investment bank, which has thousands of employees worldwide.

UBS said it expected annual cost savings of some $7 billion by 2027.

- additional reporting Reuters