According to UBS, the takeover of the major bank Credit Suisse has been completed. After the merger, around 120,000 people will work for the new UBS – but experts expect thousands of jobs to be cut.
UBS has completed the world’s most significant bank takeover since the financial crisis. According to an open letter published in several newspapers today, the major Swiss bank completed the takeover of its ailing rival Credit Suisse, which was only announced in March. “Today we reach an important milestone,” the letter said. “We have completed the legal closing of the acquisition of Credit Suisse.”
Last week, UBS offered the prospect that the takeover of the competitor would be sealed on June 12th. The merger will create the world’s second-largest wealth manager for the rich and super-rich. It is the “beginning of a new chapter – for UBS, the Swiss financial center and the global financial industry”. UBS will combine expertise, size and leadership in wealth management to create an even stronger combined company. The aim is to ensure stable conditions.
job cuts expected
The new UBS has assets under management of over five trillion dollars and around 120,000 employees. However, it shouldn’t stay that way. Experts expect that the big bank will cut thousands of jobs in order to reduce duplication and save. Years of integration work await CEO Sergio Ermotti, who was brought back to the wheel especially for this task.
The Swiss government initiated the emergency takeover in mid-March. After numerous scandals and failures, Credit Suisse found itself in a crisis of confidence that threatened its very existence. The traditional house had accumulated a loss of 7.3 billion francs in 2022, partly because the income fell well short of the costs. When customers withdrew money on a large scale, the government wanted to prevent a major banking crisis from developing in a nervous market environment after the collapse of the American Silicon Valley Bank.
Since then, the industry leader has obtained approvals from regulators around the world for the three billion franc transaction. Last Friday, UBS and the federal government finally agreed on the details of state safeguards for possible losses from the transaction with a volume of nine billion francs and signed the necessary agreement. Today is also likely to be the last day of trading for CS shares on the SIX Swiss Exchange.
Integration of the Swiss business as a major sticking point
Ermotti announced the management of the combined company about a month ago. Surprisingly for many, the only former Credit Suisse manager to sit on the 16-member board was former bank boss Ulrich Körner. He did not succeed in preventing the 167-year-old institute from going under. Experts expect that decisions about managers in the second and third hierarchical levels will soon be made.
The most important upcoming strategic decision relates to Credit Suisse’s Swiss business. From the start, UBS favored full integration of the division. But this plan caused criticism in Swiss politics as well as in the broader public. In addition to extensive job cuts, the critics also fear a restriction of competition.
To counteract this, a spin-off of the Credit Suisse business in the home market is being discussed. UBS CEO Ermotti wants to examine such a step and make a decision by the end of the summer.