ZURICH, June 5 (Reuters) – UBS announced on Monday that it anticipates finalizing its acquisition of Credit Suisse by June 12, forming a large Swiss bank with a $1.6 trillion balance sheet following a government-backed rescue earlier this year.
The completion is subject to the registration statement, which includes the shares to be delivered, being declared effective by the U.S. Securities and Exchange Commission, as well as other remaining closing conditions, UBS added.
“In as early as June 12, 2023, UBS expects to conclude the acquisition of Credit Suisse. At that time, Credit Suisse Group AG will merge into UBS Group AG,” stated UBS in a press release.
Switzerland’s primary bank agreed on March 19 to pay 3 billion Swiss francs ($3.37 billion) and bear up to 5 billion francs in losses for its smaller Swiss counterpart after a loss of customer confidence brought it to the brink of collapse, prompting Swiss authorities to intervene and prevent a broader banking crisis.
Upon completion, Credit Suisse shares and American Depositary Shares (ADS) will be delisted from the SIX Swiss Exchange (SIX) and the New York Stock Exchange (NYSE), UBS added. SIX stated in a separate announcement that Credit Suisse shares could be delisted no earlier than June 13.
Under the all-share takeover, Credit Suisse shareholders will receive one UBS share for every 22.48 shares they currently hold.
This major banking deal since the global financial crisis will establish a group overseeing $5 trillion of assets, instantly granting UBS a leading position in crucial markets that would otherwise require years to achieve.
The mega-bank will employ 120,000 people worldwide, although job cuts have already been announced to capitalize on synergies and reduce costs.
UBS has been hastening to complete the transaction swiftly, aiming to provide greater certainty for Credit Suisse clients and employees and to prevent departures.
The deal received support from 200 billion francs in liquidity assistance from the Swiss central bank, along with the government’s commitment to absorb up to 9 billion francs in losses on top of those borne by UBS.
“We must be clear…this is an acquisition, not a merger,” stated UBS CEO Sergio Ermotti during a financial conference on Friday, cautioning that there would be “painful” cost and job reductions.
There remains uncertainty regarding what UBS will do with Credit Suisse’s Swiss retail bank, which has long been regarded as the group’s “crown jewel.”
Incorporating it into UBS and combining the two banks’ largely overlapping networks could result in significant savings.
However, there has been public pressure to preserve Credit Suisse’s domestic business as a separate entity with its own brand, identity, and workforce, which is crucial.
Ermotti stated on Friday that the bank was still analyzing the situation, although the “base scenario” remains a full integration with UBS, and he would not be swayed by “nostalgia” when deciding how to proceed.
The executive, who was brought back to UBS to oversee the takeover, dismissed concerns that the new bank would be too large for Switzerland, asserting that while scale is important for banks, smaller institutions can also pose problems.
Overall, Ermotti expressed optimism about the challenges ahead.
“I am confident that this will be a remarkable story not only for our shareholders and employees but also for our clients and the financial services industry in Switzerland,” he stated on Friday.