UBS Group AG has completed the acquisition of its former competitor Credit Suisse Group AG
Swiss Bank confirmed the deal in an open letter on Monday about completing acquiring Credit Suisse. This ended the 167-year-old independent existence of Credit Suisse.
Switzerland-based multinational investment bank and financial services company UBS Group AG has completed the acquisition of its former competitor Credit Suisse Group AG. As a leading institution in the private banking and asset management sector, Credit Suisse faced a global financial crisis in 2008 to form a global powerhouse in wealth management. It was expected to fall further into debt in 2023, causing its shares to tumble down rapidly. A report stated that this crisis that happened 15 years ago led to a loss of nearly eight billion Swiss francs.
Formation of Swiss Bank Titan
The takeover of Credit Suisse by UBS Group has led to the creation of the Swiss Bank Titan. This bank announced that it had already reached an agreement in its open letter on 12 June 2023, Monday. This has led to Credit Suisse’s 167-year independent existence ending with the acquisition. Moreover, this has also resulted in a $1.6 trillion balance sheet profit and expanded weight in the wealth management sector.
UBS Group CEO Sergio Ermotti and Chairman Colm Kelleher referred to this acquisition as the “beginning of an exciting new chapter and also as a new opportunity.” This transaction, which gives UBS control over $5 trillion in assets, allows it to grow more quickly in some areas without putting in the years-long effort needed for organic expansion. As mentioned earlier, it also ended Credit Suisse’s existence.
Around 120,000 people work together in the worldwide workforce; however, as synergies are expected to lower costs, job losses are likely to be unavoidable.
Ex-Bankers From Credit Suisse Are Subject to Harsh Restrictions
UBS Group plans to execute even more strict actions on former banks of Credit Suisse to reduce risks associated with the new partnership. One of the restrictions is prohibiting accepting clients from high-risk countries and taking part in complicated financial product offerings without top UBS managers’ consent.
Nearly two dozen risk-related prohibitions have been outlined for ex-Credit Suisse employees throughout their transfer into the newly constituted business to assure further compliance with these strict requirements, referred to as “red lines.”This also stops bureaucracy from mixing with some leaders or state-owned associations in Ukraine. It was done to stop money laundering from increasing even more.
The primary goal for laying out these restrictions is to lessen the risk associated with this big deal, which Swiss authorities engineered three months earlier to stop Credit Suisse from going under.
Assurance From the Swiss Government
The agreement with the Swiss government assured UBS Group that this takeover would provide $10 billion in protection from the losses that have occurred before. After UBS absorbs the initial $5 billion loss, this financial support would be done. This will help in clearing out any leftover obstacles that are there. Moreover, banking industrialists observed that this historic acquisition would reshape the banking world and help it move forward.