The takeover should be completed in the next few days.
(Photo: IMAGO/Future Image)
Zurich The major Swiss bank UBS wants to complete the integration of Credit Suisse within seven days. The emergency takeover of the former main rival orchestrated by the Swiss government in mid-March should take place by June 12, UBS announced on Monday.
The execution is still subject to the approval of the US Securities and Exchange Commission (SEC). Credit Suisse stock and its US Depositary Receipts (ADS) would then be taken off the Swiss Stock Exchange Six and the New York Stock Exchange Nyse.
Investors responded positively to the prospect of the deal being completed soon: Credit Suisse shares temporarily climbed 2.3 percent to CHF 0.8126, while UBS made a gain of 1.5 percent. “We consider the completion of the takeover to be an important step in order to initiate what we consider to be a lengthy integration process and to get things done,” commented ZKB analyst Michael Klien.
Worry about too much market power in Switzerland
What is certain is that large parts of the former core business of Credit Suisse will be merged into UBS – including investment banking, asset management and business with professional investors (asset management). UBS boss Sergio Ermotti recently emphasized at a panel discussion that the Credit Suisse brand is disappearing abroad.
The future of the Credit Suisse business in the Swiss home market is still unclear. Ermotti recently made it clear that the full integration of Credit Suisse is his baseline scenario.
But in Switzerland there is growing political pressure to spin off certain business areas of Credit Suisse. This includes the deposit business with private customers in Switzerland, the granting of mortgages and loans for small and medium-sized companies.
Politicians such as the head of the liberal FDP, Thierry Burkart, advocate for a spin-off of Credit Suisse Switzerland. They fear that the new megabank will have too much market power: According to internal calculations, with deposits of over CHF 300 billion, it could be almost twice as large as the next largest domestic competitor.
In addition, the combined bank accounts for around a third of the Swiss mortgage market.
The political pressure is growing
The record-high special profit that the deal brought to UBS also provided material for discussion. The money house had taken over Credit Suisse for the amount of 3.25 billion dollars. However, the rival brought in around $59 billion in equity.
After restructuring measures and provisions, there are still around $35 billion left, which UBS booked as a special profit in the second quarter, as the company recently announced.
Bycatch for UBS
59
billion dollars
Credit Suisse contributed equity to the new major bank.
The political pressure is also likely to continue to increase: as early as this week, the Swiss parliament could set up a parliamentary commission of inquiry to investigate whether everything was right when UBS took over Credit Suisse.
UBS wants to keep Credit Suisse bankers in Asia
Parts of the economy are also looking at the demise of Credit Suisse with regret: the manager responsible for mergers and acquisitions at a large Swiss group told the Handelsblatt that he is still waiting before deciding whether he will more frequently mandate UBS for advice on acquisitions in the future . In the past, the responsible team at UBS would have changed frequently, while he appreciated the consistency at Credit Suisse in investment banking in Switzerland.
This is one of the reasons why UBS is trying to keep successful bankers from its former rival. According to a report by the Bloomberg news agency, the major bank wants to keep more than 100 Credit Suisse investment bankers in Asia.
Accordingly, the bank is currently negotiating with dozens of CS employees in South Korea, Thailand and India, among other places. In the emerging Asian economies outside of China, Credit Suisse traditionally has a stronger position than UBS.
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