UBS will complete its takeover of Credit Suisse “as soon as June 12”, bolstering its $1.6 trillion balance sheet following a government-backed bailout earlier this year. A new Swiss bank will be born. occurs. The closing of the transaction is subject to approval by the U.S. Securities and Exchange Commission of a registration statement covering the shares to be delivered, as well as other remaining closing conditions, UBS said in a statement on Monday.
“UBS expects to complete the acquisition of Credit Suisse as early as June 12, 2023. At that time, Credit Suisse Group AG will be merged into UBS Group AG. UBS shares rose 1.1% in Swiss pre-market trading, while Credit Suisse shares rose 0.7%. “We believe the completion of the acquisition is an important step in starting and executing what we consider to be a lengthy integration process,” said Zurcher Cantonal Bank analyst Michael Klien.
He added that “UBS’ risk profile has changed significantly, but we see it as a good opportunity for investors.” The first bank was on the brink of bankruptcy and lost customer confidence on March 19, prompting action by the Swiss authorities, prompting it to pay CHF 3 billion (3.37 billion) against its smaller Swiss competitors. million) and to absorb losses of up to CHF5 billion. To avoid a wider banking crisis.
The bank’s goal was to complete the largest banking transaction since the global financial crisis by the end of May or early June. But last month it said it was still negotiating with Swiss authorities on loss compensation and capital requirements, suggesting that these issues would take time to resolve. Upon completion, Credit Suisse shares and American Depository Shares (ADS) will be delisted from the Swiss Stock Exchange (SIX) and the New York Stock Exchange (NYSE), UBS added. In a separate statement, SIX announced that Credit Suisse shares would be delisted as early as June 13. As part of the share purchase, Credit Suisse shareholders will receive one UBS share for every 22.48 shares held.
The deal will create a group with $5 trillion in assets under management, giving UBS overnight leadership positions in key markets that would otherwise take years to scale and reach. will be obtained. The megabank, which plans to employ 120,000 people worldwide, has already announced that it will cut jobs to take advantage of synergies and cut costs.
UBS rushed to close the deal in record time in hopes of giving Credit Suisse customers and employees additional reassurance and preventing exits. The deal was backed by CHF 200 billion in liquidity support from the Swiss Central Bank and a government pledge to absorb up to CHF 9 billion in losses in addition to UBS’s losses.
“We also need to be clear that this is an acquisition, not a merger,” UBS president Sergio Ermotti said at a financial briefing on Friday, warning against making a “painful” decision. Switzerland’s largest financial institution is considering postponing its quarterly results until the end of August as it deals with complex takeover issues, the Financial Times reported on Sunday. The bank declined to comment on possible delays. The question remains as to what UBS will do with Swiss retail bank Credit Suisse, long considered the group’s “top jewel”. A merger with UBS could lead to significant cost savings, but concerns have been raised about the combined company’s size and headcount.
Ermotti said on Friday that the bank was still analyzing the situation, but that the “base case” was still a full integration with UBS and that “nostalgia” wouldn’t dictate how to proceed. Ermotti, who was returned to UBS to oversee the acquisition, expressed optimism about the challenges ahead and dismissed concerns that the new bank would be too big for Switzerland. “I am confident that this will be a great story not only for our shareholders and employees, but also for our customers and the Swiss financial services industry,” he said on Friday.