UBS completes merger with rival bank Credit Suisse
Switzerland-based multinational investment bank and financial services company UBS Group has completed the acquisition of its local rival Credit Suisse, crossing an important milestone of the biggest banking deal since the 2008 financial crisis. The merger ends Credit Suisse's 167-year operations as an independent entity.
The combined group will employ about 1.2 lakh employees worldwide. UBS had announcement a buyout of Credit Suisse for 3 billion francs on March 19, 2023, after Switzerland's second-largest bank came to a point of collapse amid a global financial downturn.
Credit Suisse said it has been merged into UBS Group AG, and the combined entity will operate as a consolidated banking group. UBS Group has also reportedly appointed Mihir Doshi, who's Credit Suisse Group's India head for the last 17 years, as its India chief of the combined entity with effect from July 1, 2023.
With this merger, June 12, 2023, marked the last trading day of Credit Suisse Group AG shares on the SIX Swiss Exchange. "Credit Suisse Group AG ADS will no longer be traded on the New York Stock Exchange. As announced on 19 March 2023, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held," USB said.
The combined group will manage total assets worth $5 trillion, solidifying UBS' position in key markets. Reacting to the development, UBS shares closed 0.8% up at Swiss franc 18.35, while Credit Suisse shares closed at Swiss franc 0.82.
According to Sergio P. Ermotti, CEO of UBS Group AG, instead of competing, UBS and Credit Suisse are now united as they embark on the next chapter. "Together, we’ll present our clients with an enhanced global offering, broader geographic reach, and access to even greater expertise. We’ll create a bank that our clients, employees, investors, and Switzerland can be proud of.”
Colm Kelleher, UBS Group AG Chairman, said the crucial transaction was completed in less than three months, bringing together two global systemically important banks for the first time. "We are now one Swiss global firm and, together, we are stronger.”
As part of the governance model, UBS Group AG will manage two separate parent banks – UBS AG and Credit Suisse AG. Each institution will continue to have its own subsidiaries and branches, serve its clients, and deal with counterparties. The board of directors and group executive board of UBS Group AG will hold overall responsibility for the consolidated group.
With the completion of the acquisition, UBS has announced board nominations for certain Credit Suisse entities. "Subject to regulatory approval, the Credit Suisse AG Board will consist of Lukas Gähwiler (chair), Jeremy Anderson (vice-chair), Christian Gellerstad (vice-chair), Michelle Bereaux, Mirko Bianchi (until 30 June 2023), Clare Brady, Mark Hughes, Amanda Norton, and Stefan Seiler.”
UBS expects its CET1 capital ratio to be around 14% in the second quarter of 2023 and will remain around that level throughout 2023. It anticipates that Credit Suisse’s operating losses and significant restructuring charges will be offset by reductions in risk-weighted assets.
In the future, UBS says it will report consolidated financial results for the combined group under IFRS in USD. The second-quarter 2023 earnings will be communicated on 31 August 2023.