UBS Completes Acquisition of CS... Creation of Integrated Bank with 2,000 Trillion Assets

UBS, Switzerland's largest investment bank, has officially completed the acquisition of Credit Suisse (CS), which was on the brink of bankruptcy. This has created a massive merged bank with assets totaling 1.45 trillion Swiss francs (approximately 2,000 trillion KRW) and 120,000 employees. Extensive business restructuring is expected to continue over the coming years.

Sergio Ermotti, CEO of UBS, announced on the 12th (local time) in a statement that the CS acquisition deal had been completed. CS, which faced a liquidity crisis due to consecutive investment failures and massive withdrawals, was acquired by UBS for 3 billion Swiss francs in March under the leadership of Swiss authorities. CEO Ermotti said, "Instead of competing, we will now unite and start the next chapter of our joint journey," promising to create many opportunities for customers, employees, and shareholders.

[Image source=AP Yonhap News]

UBS confirmed that, in the short term, UBS and CS will be managed as separate banks. All future business activities of CS will be under UBS’s management control. It is expected that overlapping businesses within the merged bank, including the investment division, will be reduced or phased out. The merged company plans to announce its first consolidated financial results on August 31.

As a result of this acquisition, CS will be delisted from the New York Stock Exchange. Shareholders will receive 1 UBS share for every 22.48 CS shares they hold. UBS stated that it expects the common equity tier 1 capital ratio to be around 14%, citing CS’s operating losses and significant restructuring costs.

On the same day, CEO Ermotti appeared on the economic media CNBC Squawk Box, stating, "We will compete better and provide better customer service," emphasizing, "We are the only bank of this size and scope focused on asset management." He added, "We must avoid bad habits and incorrect ways of doing things. We have a clear vision on how to manage the UBS-led integration," and mentioned, "We will work to restore trust."

This statement is interpreted as an acknowledgment of the various financial scandals cited as the background for CS’s downfall. The previously released statement also included a commitment that "UBS’s strong culture, conservative risk management approach, and uncompromising quality of service will remain intact."

The day before, major foreign media reported that UBS management had listed about 24 so-called 'red lines' restricting various activities of CS employees. These red lines include prohibiting the acquisition of new clients from high-risk countries such as Libya, Russia, and Sudan, and banning the launch of new financial products without managerial approval.

The merged bank currently faces several major challenges. First, the physical integration of two giant banks, UBS and CS, is a significant issue. A large-scale business restructuring process is expected to continue for years. Regarding this, CEO Ermotti explained, "We are introducing UBS’s processes and operating model to CS." Painful adjustments are also anticipated during the absorption of CS’s potential bad assets. Previously, UBS agreed to receive up to 9 billion Swiss francs in compensation from the government for losses related to this acquisition. Bit Whitman, co-founder of Porta Advisors, commented, "It will definitely be a challenge," but also noted, "UBS secured a very favorable deal over the weekend." Additionally, global interest rate hikes, credit crunches, financial market volatility, and broad macroeconomic changes are expected to pose further difficulties in the future.

This content was produced with the assistance of AI translation services.