UBS is about to finish its planned takeover of ailing rival Credit Suisse. UBS expects the world’s most important bank takeover since the financial crisis to be completed on June 12, 2023, as the Swiss institute announced on Monday. At this point in time, Credit Suisse Group AG will be merged into UBS Group AG. UBS Group AG assumes all assets and liabilities of Credit Suisse Group AG.
As announced, Credit Suisse shareholders will receive one UBS share for every 22.48 CS shares. The closing is subject to the US Securities and Exchange Commission declaring the declaration of registration for the shares to be issued to be effective and UBS deeming the remaining closing conditions to be met or waiving compliance with them. Upon completion of the transaction, Credit Suisse shares and American Depositary Shares (ADS) would be delisted from the Swiss Stock Exchange (SIX) and the New York Stock Exchange (NYSE).
The deal creates a giant with over $5 trillion in assets under management and more than 120,000 employees. However, it shouldn’t stay that way. Experts expect that UBS will cut thousands of jobs in order to reduce duplication and save.
Credit Suisse accumulated a loss of CHF 7.3 billion in 2022, partly because income fell well short of costs. A series of failures and scandals also eroded customer confidence in the 167-year-old group. To end a bank run, the Swiss government orchestrated an emergency takeover by UBS in March. The purchase price of three billion Swiss francs was well below the book value of the institute. Since then, the Swiss number one has sought approval for the takeover from supervisory authorities around the world.
To secure the transaction, the Swiss National Bank and the government have provided over CHF 200 billion in liquidity support and guarantees. Many Swiss politicians are angry that after UBS, the state had to step in again only 15 years later during the financial crisis in order to save the second major bank from collapsing. In addition, there are fears that a rescue of the new UBS, which will have a balance sheet that is around twice as large as the annual Swiss economic output, could exceed the country’s forces.
Swiss politicians have also criticized that competition in parts of the home market will suffer with the merger of UBS and Credit Suisse and that many jobs could be permanently lost. A spin-off of the Credit Suisse business in the home market would have a soothing effect. UBS CEO Sergio Ermotti wants to examine such a step and make a decision by the end of the summer.
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