ZURICH (Reuters) – UBS, a prominent financial institution, announced on Monday that it is on track to finalize its acquisition of Credit Suisse as early as June 12. This strategic move will result in the establishment of a colossal Swiss bank with an impressive balance sheet of $1.6 trillion, following a government-supported rescue earlier this year.
The completion of the takeover is contingent upon the registration statement, which encompasses the declaration of effectiveness by the U.S. Securities and Exchange Commission regarding the shares to be delivered, along with the fulfillment of other remaining closing conditions, UBS elaborated.
According to a statement released by UBS, the acquisition of Credit Suisse is expected to be concluded by June 12, 2023. At this juncture, Credit Suisse Group AG will be seamlessly integrated into UBS Group AG (SIX:UBSG).
In a decisive move to avert a wider banking crisis, Switzerland’s top bank reached an agreement on March 19, in which it committed to pay 3 billion Swiss francs ($3.37 billion) and assume potential losses of up to 5 billion francs for its smaller domestic competitor, which had teetered on the edge of collapse due to diminished customer confidence. Prompted by the gravity of the situation, Swiss authorities stepped in to prevent further escalation.
Upon the completion of the merger, both Credit Suisse shares and American Depositary Shares (ADS) will be delisted from the SIX Swiss Exchange (SIX) and the New York Stock Exchange (NYSE), as stated by UBS. SIX, in a separate statement, indicated that Credit Suisse shares could be delisted as early as June 13.
Under the terms of this all-share acquisition, each Credit Suisse shareholder will receive one UBS share for every 22.48 shares held.
This landmark bank transaction, the most significant since the global financial crisis, will give rise to a conglomerate overseeing assets worth $5 trillion, catapulting UBS into a leading position in key markets that would otherwise take years to achieve in terms of size and market reach.
Employing a global workforce of 120,000, the mega-bank has already announced plans to streamline operations, capitalizing on synergies and reducing costs through job cuts.
To assure Credit Suisse clients and employees of greater stability and minimize the risk of departures, UBS has been striving to expedite the closure of this transaction within an unprecedented timeline.
The Swiss central bank provided essential liquidity support of 200 billion francs, while the government pledged to absorb potential losses of up to 9 billion francs, in addition to those borne by UBS.
“We have to be also clear…this is an acquisition, not a merger,” emphasized UBS CEO Sergio Ermotti during a financial conference on Friday. He cautioned that painful cost reductions and job eliminations would be inevitable.
The fate of Credit Suisse’s Swiss retail bank, widely regarded as the jewel in the group’s crown, remains uncertain. By integrating it into UBS’s operations and leveraging the extensive networks of both banks, substantial cost savings could be achieved. Nevertheless, there has been public pressure to preserve Credit Suisse’s domestic business as an independent entity with its own brand, identity, and, crucially, workforce.
Ermotti stated on Friday that the bank was still evaluating the situation, although the primary scenario favored full integration with UBS. He emphasized that nostalgia would not sway his decision-making process.
Addressing concerns about the enlarged institution’s size and its implications for Switzerland, the executive, who was specifically appointed to oversee the takeover, dismissed apprehensions, pointing out that while scale is important for banks, smaller institutions can