UBS tells investors shotgun Credit Suisse takeover a ‘major challenge’

Basel, Switzerland – UBS has informed its investors today that the acquisition of Credit Suisse, its Swiss rival, is a landmark opportunity, but also a major challenge for the company. The tie-up between the two financial giants is the first ever merger of globally systematic important banks according to Chairman Colm Kelleher.

Last month, Credit Suisse came very close to collapse which prompted Swiss authorities to turn to UBS. UBS agreed to buy Credit Suisse for CHF 3 billion ($3.3 billion), and this acquisition led to an unusual takeover transaction which has proved highly controversial since its announcement.

A survey by political research firm gfs.bern revealed that a majority of Swiss did not support the deal. The merged bank assets will be twice the size of Switzerland’s annual economic output.

UBS has reported a net profit of $7.6 billion for 2022, and its flagship division of wealth management continues to see strong inflows, but now the bank has to navigate a major challenge of integrating Credit Suisse without undermining the bank’s strengths.

Last week, UBS announced that Sergio Ermotti, a Swiss banker with experience in rebuilding banks after the global financial crisis, had been rehired as chief executive to steer the takeover.

UBS’ CEO, Ralph Hamers, acknowledged the magnitude of the merger, saying that “the acquisition of Credit Suisse will be a major challenge,” but he noted that it would create a business with over $5 trillion in total invested assets.

Yesterday, it was reported that the Bank of England had approved UBS’ takeover of Credit Suisse, a crucial market for the Swiss lenders to close the deal. Additionally, UBS has obtained temporary clearance from the EU for its acquisition under the EU merger rules.

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