On Monday, UBS informed that it had completed its emergency acquisition of the rival credit Suisse, leading to the creation of a giant Swiss bank with a balance sheet estimated of about $1.6 trillion. Not just that, UBS seems to have gained a greater muscle in wealth management.
Source: Financial Times
In an open letter published in Swiss newspapers, UBS CEO Sergio Ermotti and chairman Colm Kelleher said, “This is the start of a new chapter – for UBS, Switzerland as a financial centre and the global financial industry.”
This is the biggest city in banking since the 2008 global financial crisis created challenges but also got “many opportunities” for its clients, employees, shareholders, and for Switzerland – according to them.
The letter further added that they have no doubts in the successful handling of the acquisition by them. The group will handle $5 trillion of assets and it will give UBS— the world’s largest wealth manager – a key position in the global market it would have otherwise taken years to reach in terms of size and exposure. The amalgamation also brings an end to Credit Suisse’s is 167 year old history, which was stained with losses and scandals in the recent years.
The two banks jointly employ around 12,000 workers all over the world, however UBS has already said that it will be downsizing jobs in order to cut down costs and take advantage of synergies. On March 19, It also agreed to purchase the lender for a knock down price of Fr.3 billion in stock and up to Fr.5000,000,000 in in a rescue. The government of Switzerland also encouraged to prevent a collapse in customer confidence from pushing Switzerland’s second-biggest bank over the edge.
Both the Swiss government and UBS have given assurances that the acquisition will pay off for all shareholders and it won’t become a burden for the taxpayer. According to them, the rescue was also important to protect the countries standing as a financial centre, which would have sufferedIf credit services and timely collapse would have caused a wider banking banking crisis.
UBS is likely to book a huge profit in the second quarter results on August 31, 2023 after acquiring credit Suisse for a fraction of its fair value. UPS CEO has however, cautioned the future months will be “bumpy” since UBS gets ahead with merging credit Suisse – a process that will take 3 to 5 years, according to UBS.
Portraying the first snapshot of the new group’s finances in May 2023, UBS highlighted the high stakes that are involved, by flagging tens of billions of dollars of potential costs and benefits, although there is uncertainty around these numbers.
ever since the global financial crisis, several banks have Trimmed back their world scale ambitions as constricted regulations that was subsequent to large losses eroded returns and forced them to reconsider their operation.
As per UBS, the disappearance of credit Suisse’s investment banks – will look forward to reduce significantly, as it points out yet another retreat of a european lender from securities trading, which is mainly dominated by the US firms.
According to a report published by the financial Times on Sunday, UBS is set to impose serious restrictions on credit Suisse bankers – including ban on new complex financial products. It was also reported by Bloomberg news on Saturday that’s the emergency takeover by UBS will end on Monday and it was earlier indicated by credit Suisse group AG chief executive in an internal memo.
