UBS and Credit Suisse merge amid global banking concerns

June 2023 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

June 2023 Issue

In a deal pushed by Swiss regulators eager to halt a dangerous decline in confidence in the global banking system, UBS Group AG is to acquire its long-time rival Credit Suisse Group AG for more than $3bn.

Under the terms of the all-share transaction, Credit Suisse shareholders will receive one UBS share for every 22.48 Credit Suisse shares held. Until consummation of the merger, Credit Suisse will continue to conduct its business in the ordinary course and implement its restructuring measures in collaboration with UBS.

The transaction follows the intervention of the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority (FINMA), all of which gave their full support. The regulators asked both companies to conclude the transaction to restore necessary confidence in the stability of the Swiss economy and banking system.

Moreover, the deal between UBS and Credit Suisse – the twin pillars of Swiss finance – is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators.

“This acquisition is attractive for UBS shareholders,” said Colm Kelleher, chairman of UBS. “But let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure.”

The combined businesses, which will be a leading asset manager in Europe with invested assets of more than $1.5 trillion, also reinforces UBS’s position as the leading universal bank in Switzerland.

“Bringing UBS and Credit Suisse together will build on UBS’s strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities,” said Ralph Hamers, chief executive of UBS. “The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”

Upon completion of the transaction, chairman of the combined entity will be Colm Kelleher, with Ralph Hamers acting as group chief executive.

“Given recent extraordinary and unprecedented circumstances, the merger represents the best available outcome,” said Axel P. Lehmann, chairman of the board at Credit Suisse. “This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”

The transaction is not subject to shareholder approval. UBS has obtained pre-agreement from FINMA, the Swiss National Bank, the Swiss Federal Department of Finance and other core regulators on the timely approval of the transaction.

“Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses,” concluded Mr Kelleher. “The transaction will bring benefits to clients and create long-term sustainable value for our investors.”

Fraser Tennant