UBS to acquire Credit Suisse amid banking emergency
Credit Suisse is set to be acquired by its local competitor amid ongoing fears over the bank's viability.
The Swiss Federal Department of Finance (FDF), the Swiss Financial Market Supervisory Authority (FINMA), and the Swiss National Bank (SNB) had offered their full support for the proposed acquisition of Credit Suisse by global investment banking peer UBS.
As part of the “all-share” transaction, Credit Suisse shareholders were offered one UBS share for every 22.48 Credit Suisse shares, which represented approximately CHF 0.76 ($1.22) per share for a total consideration of CHF 3 billion ($4.8 billion).
The deal was not subject to shareholder approval as UBS had secured a pre-agreement from Swiss regulators to accelerate the acquisition.
Once finalised, the acquisition would involve ‘managing down’ Credit Suisse’s investment bank while reinforcing UBS’ global investment strategy, with the combined investment business to account for approximately 25% of group risk weighted assets.
Together, the businesses were tipped to manage over $5 trillion in invested assets across global markets, of which, approximately $2.2 trillion would be invested in Europe.
The combined business was projected to generate annual run-rate of cost reductions exceeding $11.9 billion by 2027.
“Bringing UBS and Credit Suisse together will build on UBS’ strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities,” UBS chief executive officer and the prospective group CEO of the merged institution, Ralph Hamers, said.
“The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”
But UBS chairman Colm Kelleher, who would serve as chair of the combined entity, acknowledged the implications of the deal for Credit Suisse amid ongoing concerns over its viability.
“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue,” he said.
“We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management, and Swiss universal banking will augment UBS’ strategy of growing its capital-light businesses.”
“The transaction will bring benefits to clients and create long-term sustainable value for our investors.”
AUTHOR
Charbel Kadib
Recommended for you
Magellan has confirmed the new leadership of its active infrastructure ETF once head of investment, Gerald Stack, exits in July.
Vanguard has indicated it is actively trying to meet the demand for international ETFs with its next ETF launches sitting in this space.
Dubious marketing strategies involving financial advisers are among reasons that research house SQM Research has put the private credit space on alert.
New Platinum International portfolio manager Ted Alexander has told its retail and wholesale investors how he plans to improve the $4.4 billion fund's performance while the firm is also exploring new fee structures.
