UBS Credit Suisse Merger: A New Era for Swiss Banking

UBS Credit Suisse Merger: A New Era for Swiss Banking



The Swiss banking sector has witnessed a historic transformation as UBS, the world’s largest wealth manager, has finalized its takeover of its former rival Credit Suisse, creating a giant Swiss bank with a balance sheet of $1.6 trillion and greater muscle in wealth management.


Logos of UBS and Credit Suisse on buildings in Zurich


The deal, which was announced on March 19, 2023, after the intervention of the Swiss authorities to prevent a collapse of Credit Suisse, was completed on Today i.e.- Monday, June 12, 2023, clearing the way for the Herculean task of integrating two of the world’s most important banks.


UBS CEO Sergio Ermotti and Chairman Colm Kelleher shaking hands



Under the terms of the merger agreement, all shareholders of Credit Suisse received 1 share in UBS for 22.48 shares in Credit Suisse as merger consideration. This exchange ratio reflected a merger consideration of CHF 3 billion ($3.32 billion) for all shares in Credit Suisse.


The merger also brought to an end Credit Suisse’s 167-year history, marred in recent years by scandals and losses. Credit Suisse shares were up 0.9% on their last day of trading, while UBS were up around 0.8% in early trade.


The combined group will oversee $5 trillion of assets, giving UBS a leading position in key markets it would otherwise have needed years to grow in size and reach. The merger also provides for substantial cost synergies and revenue opportunities for the new entity.


UBS Chief Executive Sergio Ermotti and Chairman Colm Kelleher said in an open letter published in Swiss newspapers that the deal would create challenges but also “many opportunities” for clients, employees, shareholders, and Switzerland.


“This is the start of a new chapter – for UBS, which calls itself the world’s largest wealth managers, Switzerland as a financial centre and the global financial industry,” they said.


They also expressed their confidence that they would successfully handle the takeover and the integration process, which is expected to be completed by the end of 2023.


Swiss flag and Swiss francs



The Swiss National Bank granted Credit Suisse access to facilities that provided substantial additional liquidity until the consummation of the merger. The Swiss government also agreed on Friday to provide a 9 billion Swiss franc ($10 billion) public backstop for losses from winding down parts of Credit Suisse’s business.


Both UBS and the Swiss government have offered assurances that the takeover will pay off for shareholders and will not become a burden for the taxpayer. They say the rescue was also necessary to protect Switzerland’s standing as a financial centre, which would suffer if Credit Suisse’s collapse triggered a wider banking crisis.


However, some analysts and experts have questioned the rationale and the implications of the deal, which saw the state bankroll the rescue and effectively end the competition between the two largest Swiss banks.


They argue that the deal has exposed the failure of the too-big-to-fail reform after the global financial crisis, which aimed to prevent taxpayers from bailing out troubled banks. They also warn that the deal could create a systemic risk for Switzerland and reduce its attractiveness as a banking hub.


Despite these concerns, UBS and Credit Suisse have maintained that their merger is a strategic move that will benefit all stakeholders and create value for the long term.


They have also highlighted their commitment to uphold their social and environmental responsibilities and to support their clients in achieving their financial goals.


The merger of UBS and Credit Suisse marks a new era for Swiss banking and wealth management. It also poses new challenges and opportunities for both banks and their customers.


Graph comparing UBS and Credit Suisse in key operating metrics



As UBS embarks on its journey to become a wealth management powerhouse, it will have to navigate the complexities of integrating two different cultures and businesses while maintaining its competitive edge and customer loyalty.


It will also have to face the changing dynamics of the global financial industry, which is undergoing rapid digitalization, innovation, regulation, and disruption.


However, with its strong leadership, vision, and resources, UBS is well-positioned to overcome these challenges and seize these opportunities. It has proven its resilience and adaptability over its 160-year history and has emerged stronger from every crisis.


UBS is confident that its merger with Credit Suisse will enable it to achieve its ambition of becoming “the best bank for clients across regions”. It is also optimistic that its merger will contribute to strengthening Switzerland’s role as a leading financial centre and enhancing its reputation as a safe haven for wealth creation and preservation.


Which is better UBS or Credit Suisse?


This is a difficult question to answer, as both banks have their strengths and weaknesses. However, based on some key operating metrics, UBS seems to have a larger and more profitable business than Credit Suisse. UBS has a higher market capitalization, revenue, net income, return on equity, and assets under management than Credit Suisse. UBS also has a lower cost-to-income ratio, which means it is more efficient in generating revenues from its expenses. Moreover, UBS has a stronger focus on wealth management, which is a more stable and lucrative business than investment banking or trading. UBS derives about 70% of its revenues from wealth management, compared to 50% for Credit Suisse. On the other hand, Credit Suisse has a more diversified business model, with a significant presence in investment banking, asset management, and Swiss universal banking. Credit Suisse also has a higher pre-tax margin in its wealth management business than UBS, which means it is more profitable per dollar of revenue. Credit Suisse’s wealth management margin was 29% in 2021, compared to 23% for UBS.


Are UBS and Credit Suisse competitors?


Yes, UBS and Credit Suisse are competitors in many segments of the global financial industry. They compete for clients, talent, market share, and reputation in wealth management, investment banking, asset management, and Swiss universal banking. They also compete with other global banks such as JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, HSBC, Deutsche Bank, and others. However, UBS and Credit Suisse also have some areas of cooperation and collaboration. For example, they are both members of the SIX Swiss Exchange, the Swiss Bankers Association, the Financial Stability Board, and other industry associations. They also participate in joint initiatives such as the Swiss Sustainable Finance platform and the Swiss Blockchain Federation.


What does UBS stand for?


UBS stands for Union Bank of Switzerland (in German: Union Bank von Schweiz). The name was adopted in 1998 after the merger of two Swiss banks: Union Bank of Switzerland (founded in 1862) and Swiss Bank Corporation (founded in 1872). However, since 2003, UBS has been using its three-letter acronym as its sole corporate identity and brand name.


Is Swiss Bank and UBS same?


No, Swiss Bank and UBS are not the same. Swiss Bank is a generic term that refers to any bank that operates in Switzerland or has Swiss origins. There are hundreds of Swiss banks of different sizes and specialties. Some of the largest and most well-known Swiss banks are UBS, Credit Suisse, Julius Baer, Pictet, Lombard Odier, Vontobel, Zürcher Kantonalbank, Raiffeisen Schweiz, and others. UBS is one of the Swiss banks that has a global presence and offers a wide range of financial services to individuals, corporations, institutions, and governments.


UBS News?


UBS News is a section on the official website of UBS that provides the latest information and updates about the bank’s activities, achievements, events, opinions, research, awards, and media coverage. It also features stories and insights from UBS experts and leaders on various topics related to finance, economics, society, sustainability, innovation, culture, and sports. UBS News can be accessed at https://www.ubs.com/global/en/news.html.


Credit Suisse Share Price?


Credit Suisse Share Price is the market value of one share of Credit Suisse Group AG (CSGN), the holding company of Credit Suisse. The share price is determined by the supply and demand of investors who buy and sell the shares on stock exchanges such as SIX Swiss Exchange (SIX), New York Stock Exchange (NYSE), London Stock Exchange (LSE), Tokyo Stock Exchange (TSE), Hong Kong Stock Exchange (HKEX), Singapore Exchange (SGX), Euronext Paris (PAR), Euronext Amsterdam (AMS), Euronext Brussels (BRU), Euronext Lisbon (LIS), Borsa Italiana (BIT), Bolsa de Madrid (MAD), Bolsa de Valores de São Paulo (B3), Bolsa Mexicana de Valores (BMV), Bolsa de Comercio de Santiago (BCS), Bolsa de Valores de Lima (BVL), Bolsa de Valores de Colombia (BVC), and Bolsa de Valores de Buenos Aires (BCBA). The share price can fluctuate depending on various factors such as the performance, outlook, strategy, reputation, and governance of Credit Suisse, as well as the market conditions, sentiment, expectations, news, events, and regulations that affect the banking industry and the economy. As of June 11, 2023, the last trading day before the completion of the UBS takeover, the share price of Credit Suisse was CHF 0.13 on SIX, $0.14 on NYSE, £0.10 on LSE, ¥15.50 on TSE, HK$1.09 on HKEX, S$0.19 on SGX, €0.12 on PAR, €0.12 on AMS, €0.12 on BRU, €0.12 on LIS, €0.12 on BIT, €0.12 on MAD, R$0.74 on B3, MX$2.86 on BMV, CLP$102.50 on BCS, PEN$0.48 on BVL, COP$436.00 on BVC, and ARS$13.26 on BCBA.

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