The Swiss Times - Swiss News in English

UBS: CS merger complete next week

  • By The Swiss Times
  • 5 June 2023
After months of protests and lawsuits, Swiss bank UBS will finally absorb failing Credit Suisse, thus creating a ‘monster’-sized bank Switzerland has never before seen.
UBS: CS merger complete next week
UBS CEO, Sergio Ermotti, speaks with the Swiss Media Forum last month (Keystone SDA).

(Keystone SDA) UBS will complete the takeover of Credit Suisse next week at which point CS shares will also disappear from the Swiss stock exchange.

The two banks announced on Monday that Credit Suisse Group would be merged into UBS Group next Monday, June 12. However, the execution is still subject to the approval of the U.S. Securities and Exchange Commission (SEC).

It is mainly about the delisting of shares in the United States. Other U.S. authorities had already approved the merger of the Swiss banks: for example, the Federal Reserve had given its blessing on the purchase of CS’s U.S. subsidiaries in mid-April. Other important responsibilities with regard to the global asset manager UBS — such as the EU Commission or the Bank of England — have also already signaled the green light.

UBS: CS merger complete next week
Credit Suisse’s headquarters at Paradeplatz in Zurich (Keystone SDA).
Prepare for delisting

Credit Suisse shares should therefore disappear from the Swiss stock exchange on June 13 at the earliest, which SIX has agreed to, as it informed in a separate announcement on Monday (SIX Swiss Exchange, based in Zurich, is Switzerland’s principal stock exchange). Should the transaction be completed before the U.S. stock market opens on Monday, the depositary receipts would even be delisted from the New York Stock Exchange as of June 12. Otherwise, it would happen a day later.

Credit Suisse shareholders: ‘We feel cheated’

SIX wants to communicate the definitive last trading day at the latest on the last trading day before the local stock exchange opens. This is also particularly relevant for the leading index SMI. If the CS share falls out, another title will extraordinarily moved up instead. According to the latest calculations by the stock exchange, this could be Kühne+Nagel.

CS’s obligations under its outstanding debentures will become UBS’s obligations upon closing of the transaction, the bank said Monday. With the delisting, CS’s ad hoc publicity obligation will no longer apply. Monday’s announcement is likely to have been one of the last according to the listing rules, if not the last.

UBS: CS merger complete next week
Protesters demonstrate at the annual shareholders’ meeting of Credit Suisse (Keystone SDA).
A banking giant is born

UBS had expected the acquisition transaction to be completed in the current second quarter. Most recently, management had promised at the end of May or beginning of June.

The takeover of the second largest Swiss bank by the largest Swiss bank was sealed on Sunday, March 19, 2023. In order to save the struggling CS from collapsing, UBS agreed under pressure from politicians. Representatives of the federal government, the supervisory authority FINMA and the Swiss National Bank (SNB) worked out this solution over the weekend after CS’s situation had deteriorated drastically.

The SNB spoke of further liquidity assistance totaling CHF 200 billion, after a loan of CHF 50 billion had previously been granted. In addition, UBS also received guarantees from the federal government in the amount of 9 billion Swiss francs. These apply to losses in a previously defined part of the portfolio, which is assumed should any losses exceed a threshold of 5 billion. Credit Suisse’s trading business is to be shut down.

The merger of the two major Swiss banks will create a banking group with assets under management of around USD 5 trillion. Observers speak of the most significant takeover within the sector in Europe since the financial crisis 15 years ago.

This article was reprinted with permission from Keystone SDA.

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