2023-06-12 16:16:45
The acquisition of Credit Suisse by UBS was decided on March 19, 2023. ARND WIEGMANN / REUTERS
Authorized on March 19 by the Swiss government, the acquisition is definitively completed, and marks the beginning of “a new historic chapter” for the Swiss banking sector.
The acquisition of Credit Suisse being finalized, UBS can now launch the major project of integrating its long-time rival: “the most crucial phaseof this rescue operation. The construction site is huge and complex and will be watched closely by customers, employees and politicians in Switzerland. Colm Kelleher, the president of the first bank of the country, was pleased that the transaction could be finalizedin less than three monthsto give birth to a banking colossus, which is causing serious concern in Switzerland, in particular because of the thousands of jobs that risk being lost. Sergio Ermotti, the CEO of UBS wants to create a bank whose “employees, investors and Switzerland can be proud“, but warned that the coming months would be”bumpybecause the integration will lead towavesof difficult decisions to make.
On March 19, UBS had agreed to buy Credit Suisse under pressure from the authorities for 3 billion Swiss francs (an equivalent sum in euros). The crisis of confidence, after a series of scandals and virulent criticism of risk management, had pushed Credit Suisse to the brink of bankruptcy. In an internal memo to employees, seen by AFP, UBS executives welcomed Credit Suisse employees, calling on all staff to “patiencewhen concrete details are lacking. “The most crucial phase is just beginning“, write Colm Kelleher and Sergio Ermotti.
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No compromise
According to the Financial Times, UBS will impose “red linesto Credit Suisse staff about the type of business they will be able to do while the integration is complete. And UBS executives were careful to highlight their approach “conservativeof the risk, promising that the integration will take place withoutcompromise“. A clear message internally and externally. In practice, the two banks will continue to operate separately until their integration. But UBS is already announcing the establishment of a board of directors for certain entities of Credit Suisse, entrusting the presidency to Lukas Gähwiler, the current vice-president of UBS. Finma, the Swiss market supervisory authority, welcomed the rapid reduction of risks that UBS foresees for the investment bank, specifying in a press release that it will continue to “watch very closely» the integration process. This merger isa massive task, with substantial implementation risks“, warned Suvi Platerink Kosonen, analyst at ING, in a market note.
This takeover caused a stir in the political world in Switzerland. Given the scandals accumulated by its rival, UBS has obtained significant guarantees from the Confederation to protect itself against possible unpleasant surprises in the accounts. To shed light on this emergency rescue, Parliament created a rare parliamentary commission of inquiry. Thomas Jordan, the boss of the Swiss National Bank (SNB), however assured that there was no other solution. If he is ‘Shame’ « that there is only one big bank left, “there would have been an international financial crisis”without this redemption, which would have been much worse for Switzerland”, he explained in an interview with the Sunday newspaper SonntagsZeitung.
120,000 employees
Investors would like to know more about the integration process, the units that will be absorbed or even the fate of the Swiss branch of Credit Suisse, the flagship of the bank which had escaped the scandals. Duplicates are likely to be numerous at the level of branches and jobs. At the end of 2022, the two giants currently had around 120,000 employees worldwide, including 37,000 in Switzerland. Among the major challenges are also the measures that regulators could impose to protect competition, which could require “possible splitsactivity, according to Ipek Ozkardeskaya, an analyst at Swissquote Bank.
Investors are hoping for answers, especially when the results of the second quarter are published, pushed back to August 31 given the magnitude of the task that awaits UBS.
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