UBS Takeover of Credit Suisse a Done Deal
It’s been tagged as the biggest deal banking in the world since the dark days of 2008. The UBS takeover of Credit Suisse. But the imminent collapse of Credit Suisse which preceded it also tarnished the reputation of Switzerland’s banking credibility.
The deal creates a wealth management group with a $1.6 trillion balance sheet, effectively handling $5 in assets.
In March of this year the Swiss Government was concerned about the bank’s haemorrhaging of deposits. It manoeuvred Credit Suisse into accepting a bargain basement price of 3 billion Swiss francs. There was also an additional 5 billion in allowable, assumed losses.
On Friday 14th June, the UBS takeover of Credit Suisse was done, apparently rushed through at a pace quite out of character for this sector in Switzerland.
UBS CEO Returns
Sergio Ermotti, CEO of UBS said in a statement, “We’ll now unite as we embark on the next chapter of our joint journey”. He also told CNBC on Monday that the UBS takeover of Credit Suisse would help the bank would “Compete better, serve our clients better. We are the only bank with this kind of magnitude and size and scope that is focused on wealth management.”
The takeover now sees UBS as the 21st biggest bank in the world.
Analysts are not entirely convinced by the takeover, despite a rise in UBS stock value. Some think the sheer size of the bank will invite more severe regulations. Ironic, considering regulations played a major role in the failure of Credit Suisse. However, UBS is set to post a huge Q2 profit after the deal.
The global reputation of Switzerland’s dependability in the banking sector will take some time to repair.
On balance though, the prevention of collapse of this 167-year-old institution may restore faith in the system faster than analysts anticipate.
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