Credit Suisse Era Ends After UBS Takeover Becomes Official
2 min read 12 Jun 2023, 04:25 PM IST UBS initially will operate Credit Suisse as a separate bank, says it expects full integration to take three to five years
PremiumUBS said Monday it completed its rescue of rival Credit Suisse, marking the end of 167 years of independence for the troubled bank and the beginning of a new stretch in financial history with one dominant Swiss manager of money for the global elite.
Monday was the final trading day for Credit Suisse stock, which has traded on Switzerland’s stock exchange for decades. Its American depositary receipts also will cease trading. Credit Suisse shareholders are receiving one share in UBS for every 22.48 in stock.
UBS bought Credit Suisse after the smaller bank lost the confidence of customers and investors. The Swiss government engineered the deal and provided a cache of perks, including a guarantee against some potential losses and time to build up more capital. The combination creates a behemoth in Switzerland, with $1.7 trillion in total assets and a nearly 40% market share of the country’s loans and deposits.
It is the first combination of two globally systemically important banks since financial regulators created the designation for large and complex institutions after the 2008 financial crisis.
UBS initially will operate Credit Suisse as a separate bank, and has said it expects the full integration to take three to five years. UBS has said it could still sell or dispose of Credit Suisse’s large domestic arm. Some Swiss politicians want both banks to keep operating in the country to prevent large job losses. UBS has said it would make a decision in the third quarter.
The combination is likely to result in tens of thousands of jobs being eliminated, including in New York and London, where UBS is keeping only portions of Credit Suisse’s investment bank. UBS has said it would save billions of dollars from the banks’ combined cost base, mainly from job cuts. UBS has said it would give detailed plans on the banks’ integration in the fourth quarter.
The combined entity will be among the world’s largest wealth managers and asset-management firms, with around $5 trillion in invested assets. UBS has said it didn’t want to have to buy Credit Suisse, but that it is gaining coveted customers in key markets at a cut price. Both banks vied to manage money and investments for the rich in growing wealth markets such as Asia, the Middle East and Latin America.
Credit Suisse struggled for around a decade to adapt to postcrisis bank rules. A culture driven by high risk and high profits opened the bank up to financial losses and scandals, many of them stemming from its investment bank. A last-ditch plan to restructure last year ran out of time with investors.
The bank’s long decline accelerated after it lost $5 billion from family office Archegos Capital Management defaulting on trading positions in 2021. Customers started fleeing last year and it needed emergency liquidity in March following the sudden collapse of Silicon Valley Bank in the U.S.
Write to Margot Patrick at margot.patrick@wsj.com