The acquisition of UBS is expected to finish on June 12, according to a leaked internal memo from Credit Suisse Chief Executive Officer Ulrich Koerner, who made the bank’s rescue announcement on Saturday. As the acquisition approached its conclusion, Koerner expressed optimism for a fresh and promising future in his letter.
The Financial Times reported on Sunday, citing individuals with knowledge of the situation, that UBS AG would place harsh limitations on Credit Suisse bankers, including a prohibition on new customers from high-risk nations and on complicated financial instruments.
Nearly 20 “red lines” have been established by UBS, which prohibit Credit Suisse personnel from doing a variety of things include servicing customers in places like Libya, Russia, Sudan, and Venezuela or introducing new products without first receiving permission from UBS officials.
According to reports, public corporations and politicians from Ukraine would be prohibited to stop potential money laundering.
In addition, loans secured by high-value assets including yachts, ships, and real estate worth more than $60 million would need clearance, according to the Financial Times. Credit Suisse workers will now need permission from UBS management before introducing new products.
The projected Monday closing of the UBS acquisition was announced by Credit Suisse Chief Koerner in a note to staff members, as viewed by Bloomberg News. Both Credit Suisse and UBS, however, chose not to comment on the letter.
With the purchase of Credit Suisse by UBS, a strong European banking titan will be born. A rough time for the sector has come to an end as a result of Credit Suisse’s considerable struggles.
According to the agreement between the two banks, Credit Suisse shareholders would get one UBS share for every 22.8 outstanding shares they possess.
How did Credit Suisse fare?
The second-largest bank in Switzerland at the time, Credit Suisse, declared bankruptcy in March 2023 and was acquired by competitor UBS for 3 billion Swiss francs ($3.3 billion USD).
Recent controversies involving Credit Suisse include an espionage controversy, the demise of two investment vehicles in which the bank had a significant stake, and a changing board of directors. Two US banks, Silicon Valley Bank and Signature Bank, also failed shortly before Credit Suisse, sending shockwaves across the world’s financial system.
The deal, which the Swiss government supported in order to prevent the smaller bank from going under, will have significant effects on the worldwide wealth management sector. The resulting megabank will be twice as big as the Swiss economy and will dwarf all other Swiss lenders.
Another noteworthy event is the recent deal UBS and the Swiss government agreed to compensate possible losses of $9.9 billion in Swiss francs due to the rescue of Credit Suisse.
UBS raised the prospect of delaying the publishing of its second-quarter results from the initial date of July 25 in order to allow for the integration of financial statements. According to The Financial Times, profits may not be released until the end of August.
UBS had 74,000 employees before the merger. UBS’s overall headcount would rise to 120,000 if all of Credit Suisse’s staff were absorbed, however this is unlikely given overlap and continuing bank layoffs.
This agreement is a vital last barrier to clear before the historic takeover is finished.