September 30, 2023

UBS completes acquisition of Credit Suisse in deal meant to stem global financial turmoil

BERLIN (AP) — UBS said Monday it has completed its acquisition of embattled rival Credit Suisse, nearly three months after the Swiss government rushed to a bailout deal to merge the country’s two largest banks in a bid to boost its reputation. of Switzerland as a global financial services provider. center and stifles market turmoil.

A statement from the bank said that “UBS today completed its acquisition of Credit Suisse, a significant milestone.”

UBS had said last week it expected to complete the 3 billion Swiss franc ($3.3 billion) acquisition as early as Monday — which will be the last day of trading for Credit Suisse shares on the Swiss stock exchange. Credit Suisse is also no longer traded on the New York Stock Exchange.

It is a pivotal moment for the two Zurich-based rivals, whose combination has sparked concerns about thousands of expected job cuts, reprimands and lawsuits over the terms of the deal, and sparked fears about the impact of creating a Swiss megabank which are too big to fail.

“This is a very important moment – ​​not just for UBS, (but) for Switzerland as a financial location and for Switzerland as a country,” UBS CEO Sergio Ermotti said on Friday. “So we do feel the responsibility, but we are fully motivated.”

Returning to UBS to push through the deal, Ermotti acknowledged that “the next few months are definitely going to be bumpy” but said the bank was “very focused on getting it right.”

The Swiss government orchestrated the bailout of Credit Suisse over a weekend in March after the lender’s shares plummeted and customers rushed to withdraw their money, fearing the collapse would further shake global financial markets in the wake of the bankruptcy of two U.S. banks.

“I am pleased that we successfully completed this pivotal transaction in less than three months, bringing together two globally systemically important banks for the first time,” UBS Chairman Colm Kelleher said in Monday’s statement. “We are now one Swiss global company and together we are stronger.”

Ermotti said that “we will provide our customers with an enhanced global offering, broader geographic reach and access to even greater expertise.”

UBS Group AG will operate two separate parent banks, UBS and Credit Suisse, each of which will continue to have its own branches and customers.

The 167-year-old Credit Suisse had seen a series of scandals over the years that touched the core of his business, ranging from bad bets on hedge funds to a Bulgarian cocaine gang’s failure to prevent money laundering and allegations that it failed to report secret foreign accounts that wealthy Americans used to avoid paying US taxes.

UBS inherits pending cases against Credit Suisse and the financial repercussions that entails, including a recent ruling in Singapore that found Credit Suisse owes former Georgian Prime Minister Bidzina Ivanishvili hundreds of millions of dollars for failing to protect the billionaire’s money in a trust stolen by a manager.

Credit Suisse is appealing that and a similar case in Bermuda, where Ivanishvili says a bank subsidiary failed to prevent “fraudulent mismanagement” of its assets in two life insurance policies.

The Swiss government has agreed to provide UBS with 9 billion Swiss francs ($10 billion) in guarantees to cover any losses it may incur from the takeover after UBS covers any hits of up to 5 billion francs ($5.5 billion) .

That emergency rescue plan is facing political opposition in the run-up to parliamentary elections in October. The Swiss lower house has rebuked it in a symbolic vote and lawmakers have agreed to open an investigation into the deal and the events leading up to it. The office of the Swiss Attorney General has already opened an investigation.

Credit Suisse investors also sued the country’s financial regulators after about 16 billion Swiss francs ($17.7 billion) worth of higher-risk bonds were wiped out.

The US Federal Reserve, the executive branch of the European Union and others worldwide have signed off on the acquisition. Credit Suisse was classified as one of the 30 major banks in the world because its collapse posed a greater risk to the financial system.


Bonnell reported from London.

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