The Winner - UBS

UBS Group AG is the big winner in Credit Suisse Group AG’s crisis after a government-brokered deal to buy Credit Suisse for more than $3 Billion. This deal includes extensive guarantees and liquidity provisions.

UBS will see its wealth and asset management's invested assets soar to about $5 Trillion.

Though UBS CEO Ralph Hamers and his team will have plenty of work on their plate with this deal, they will have 56 Billion Francs of badwill to help cover any write-downs.

They will also have 9 Billion Francs worth of guarantees from the Swiss government to cover some losses. UBS can also access a huge liquidity line from the central bank.

The Many Losers

The Saudi National Bank lost 1.1 Billion Francs in less than 15 weeks from when it bought its stake in Credit Suisse’s latest capital raise and became the Swiss bank’s largest shareholder.

The Qatar Investment Authority is Credit Suisse’s second-biggest holder and also owned the firm’s AT1 bonds in the past that were written to zero in the deal.

Credit Suisse’s shareholders will not get to vote on this deal after Switzerland made changes in its regulations to rush the merger through.

Credit Suisse CEO Ulrich Koerner is expected to quit after inheriting a broken bank that he couldn’t revive from a crisis of confidence.

Michael Klein’s dream of building a new CS First Boston as a spin-off may not be fulfilled after the UBS deal as UBS Chairman Colm Kelleher indicated that they were happy with UBS’ own investment bank and planned to cut back Credit Suisse’s substantially.

The Swiss regulator will impose losses on $17 Billion of high-risk Additional Tier 1 (AT1) bonds that are a portion of a buffer of debt and equity aimed to prevent taxpayers from having to bear the brunt of a bank’s collapse.

The Swiss government had to provide guaranteed worth billions of Francs to UBS. Moreover, to facilitate the deal, the central bank was forced to put taxpayers at risk and provide extensive liquidity backstops.