الأربعاء, أبريل 5th 2023
While yesterday’s كريدي سويس shareholder meeting had the air of a funeral of someone who will not be missed, today’s UBS shareholder meeting felt like the shotgun wedding of an ill-matched couple.
It has been two weeks since the Swiss government announced that UBS would purchase Credit Suisse (CS) for CHF3 billion with Switzerland putting up a state guarantee on the merger totaling 260 billion Swiss francs, or about one-third of the country’s GDP. The deal was made secretly over a weekend without consulting investors, clients or shareholders. In turn, Swiss citizens have turned out in thousands to protest the “monster bank.”
At the beginning of today’s meeting, former UBS CEO Ralph Hamers discussed the elephant in the room: that he was being replaced by former CEO Sergio Ermotti, effective immediately.
“The acquisition of Credit Suisse will be a major challenge,” Hamers said, adding that it “is expected to create a business with more than CHF5 trillion in total invested assets.”
Before taking a final curtain call, he highlighted that UBS reported a net profit of CHF6.8 billion in 2022 thanks to massive inflows in wealth management thanks to CS’s demise. Amidst a standing ovation for his work, Hamers turned the stage over to incoming CEO Ermotti. The change in leadership speaks to Ermotti’s experience rebuilding UBS following the 2008 global recession.
The bank executives tried their best to assure shareholders that the merger will pay off in the end. It will be “a new beginning and huge opportunities ahead for the combined bank and for the Swiss financial center as a whole,” UBS Chairman Colm Kelleher told the group gathered in Basel.
“We believe the transaction is financially attractive for UBS shareholders,” he said, but shareholders were quick to express their anger over the secrecy of the deal. One shareholder called the merger “an insult.” Another said it reflected the entire Swiss banking system as it stands today.
“I sometimes get the feeling that Switzerland was built up only on the basis of fraud,” he said, adding “we’re using banking secrecy for the wrong purposes.”
Another cited concerns over the behemoth size of the new bank’s effect on competition. Vice Chairman Lukas Gaehwiler responded that with 250 banks in the country there should be enough competition, although the capital in the new UBS-CS bank is about twice as much as Switzerland’s economy.
Another shareholder brought up worries over job losses, citing a local newspaper article in which an anonymous UBS source is quoted saying that the combined workforce will be reduced by as much as 30%. Gaehwiler said although it was too early to worry about pink slips.
A few shareholders brought up the state of CS and whether the failed bank’s stock would keep trading. Gaehwiler replied that when it comes to Credit Suisse’s domestic business that for now, “all options are on the table.” CS will continue to use its name, brand, offices and employees for at least the next few months, he added.
A few shareholders echoed comments made during CS’s annual shareholder meeting: did the merger happen because of outside influences – especially those from the U.S.?
“Why do we, in Switzerland, care what the U.S. thinks of us?” one man said.
Ermotti reiterated that the decision was made for the “financial stability and soundness of Switzerland” and that they only had “48 hours” to act. The Bank of England has already approved of the merger. The EU has also given UBS and CS its blessing, pending clearance.
“We will be a bigger and better UBS,” Ermotti said. “We will be reducing risks and doing more of the things we do well.”
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