The largest bank takeover since the financial crisis 15 years ago is nearing completion. In a few days, Credit Suisse should be merged into UBS. The deal has sparked controversy in Switzerland.
Credit Suisse’s nearly 167-year history should end in a few days. The emergency receivership of the major Swiss bank will be completed on June 12, according to a joint statement with UBS. At this point, Credit Suisse will be merged into the larger UBS Group.
Execution is still subject to approval by the U.S. Securities and Exchange Commission (SEC). UBS itself must also consider the fulfillment or non-compliance of other closing conditions. The Swiss government and UBS apparently still need to discuss implicit state guarantees for takeover risks, according to Bloomberg.
The merger would create a financial powerhouse with more than $5 trillion in assets under management and more than 120,000 employees. However, it shouldn’t stay that way. Experts expect UBS to cut thousands of jobs to reduce duplication and save money.
March Emergency Relief
After numerous scandals and failures, Credit Suisse found itself in a crisis of confidence that threatened its very existence. When customers withdrew money on a large scale, the Swiss government organized the industry leader UBS in an emergency takeover in mid-March.
She wanted to prevent a major banking crisis from developing in a tense market environment following the collapse of Silicon Valley Bank. The SNB and the government together provided more than CHF 200 billion in liquidity support and guarantees.
disputed transaction
The deal has sparked controversy in Switzerland. After only 15 years of backing UBS, the state had to step in again. There are now fears that a rescue of the new UBS Group AG, with a balance sheet roughly twice the size of Switzerland’s annual economic output, could be beyond the country’s capabilities. In addition, the consequences of competition and the risk of permanent unemployment have also been criticized.
To offset this, discussions are underway to spin off Credit Suisse’s domestic market operations. UBS CEO Sergio Ermotti hopes to study this step and make a decision by the end of summer.
UBS, on the other hand, apparently plans to expand its Asian operations following the acquisition. The big bank is currently in talks with more than 100 Credit Suisse investment bankers in South Korea, Thailand, Vietnam and India to keep them in the group, according to Bloomberg.