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UBS Completes Credit Suisse Takeover

Tom Burroughes

13 June 2023

True to its word, yesterday, as it had flagged a few days ago.

Credit Suisse has been merged into UBS, and the combined entity will operate as a consolidated banking group. The move leaves Switzerland with one universal bank, coming after a period of turmoil for Zurich-listed Credit Suisse which had seen it sustain big client outflows and a slump in its share price. 12 June marked the last trading day of Credit Suisse shares on the SIX Swiss Exchange in the Alpine state, UBS said in a statement. Credit Suisse’s American Depository Shares will no longer be traded on the New York Stock Exchange. 

As announced on 19 March 2023, Credit Suisse shareholders will receive one UBS share for every 22.48 Credit Suisse shares held. UBS has paid SFr3 billion ($3.32 billion) for its rival. As part of the deal, conducted at the urging of the Swiss authorities, holders of Credit Suisse’s Additional Tier 1 bonds – forms of buffer capital created for European banks after the 2008 crash – have had their bonds written down. This has sparked anger and a number of lawsuits, including from institutions such as PIMCO.

As previously announced, UBS said it will operate the following governance model pending further integration:

-- UBS will manage two separate parent banks – UBS and Credit Suisse. 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 will hold overall responsibility for the consolidated group; 
-- Subject to regulatory approval, the Credit Suisse board will consist of Lukas Gähwiler (chair), Jeremy Anderson (vice chair), Christian Gellerstad (vice chair), Michelle Bereaux, Mirko Bianchi (until June 30, 2023), Clare Brady, Mark Hughes, Amanda Norton and Stefan Seiler.

"I‘m pleased that we’ve successfully closed this crucial transaction 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 we start to operate the consolidated banking group, we’ll continue to be guided by the best interests of all our stakeholders, including investors. Our top priority remains the same: to serve our clients with excellence,” Colm Kelleher, UBS chairman, said. 

UBS expects its Common Equity Tier 1 capital ratio to be around 14 per cent in the second quarter of 2023 and to 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.

The bank said that in future it will report consolidated financial results for the combined group under IFRS standards in dollars. It issues second-quarter 2023 earnings will be communicated on 31 August 2023. (For several years UBS has issued results in dollars rather than the Swiss franc, explaining that it earns the bulk of its revenues outside Switzerland. A number of other international groups, such as HSBC, also do so.)

As reports such as this show, UBS faces a huge task of ensuring that the two organisations integrate while dealing with legacy legal and regulatory issues that have plagued Credit Suisse for years.