Trading in the Credit Suisse share is no longer possible from this Tuesday: the stock exchange listing is a thing of the past. On Monday, the takeover of the old Swiss bank by its rival, UBS, was formally completed. The takeover — UBS bought Credit Suisse for 3 billion Swiss francs (3.1 billion euros) — was orchestrated by the Swiss state three months ago, following a series of scandals and poor performance that threatened to collapse 167-year-old Credit Suisse.
UBS President Colm Kelleher said in a press release that such a major acquisition – the largest since the 2008 financial crisis – had been completed in a short time. Sergio Ermotti, CEO of UBS, wants to build a bank that “employees, investors and Switzerland will be proud of”. But the coming months will be “bumpy,” with many tough decisions ahead, Ermotti added. Although the takeover of the competitor has now been formalised, the integration of Credit Suisse has barely begun. For the time being, Credit Suisse will continue to operate as a subsidiary of UBS.
Top people
What UBS certainly does not want to bring in: the risky way of banking from Credit Suisse. According to the British business newspaper Financial Times the UBS board has drawn up quite specific rules for the new colleagues of the old competitor.
For example, they are not allowed to trade in Korean derivatives. With those financial products, Credit Suisse made a loss of $ 120 million in 2006. It is also not allowed to provide loans for the purchase of yachts and real estate for more than 60 million euros without the permission of the manager. In the past, Credit Suisse bankers sometimes helped sanctioned clients to buy that superyacht with constructions. Furthermore, Credit Suisse colleagues are not allowed to recruit new clients from high-risk countries such as Russia. “We fear cultural contamination,” Kelleher said, according to the FT. The banking union SBPV accuses the management of “unequal treatment” of the Credit Suisse people.
Some of Credit Suisse’s top people, including chief financial officer Dixit Joshi, will not return to management. Credit Suisse CEO Ulrich Körner will continue as chief of the subsidiary, as will Credit Suisse chief of staff Christine Graeff (she previously served as spokesperson for former European Central Bank president Mario Draghi).
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The unions fear many redundancies in the new construction. At the end of 2022, both banks had around 120,000 employees worldwide, of which 37,000 in Switzerland. Ermotti wants to save billions in costs: many functions are now doubled and both UBS and Credit Suisse have a national network of branches for consumers. The Credit Suisse branches may be spun off and put up for sale. “The employees have been living in uncertainty about their future for 85 days,” said the SBPV union on Monday.
Swiss banking regulator Finma calls reduction of the risks arising from Credit Suisse “one of the most urgent objectives” that UBS must pursue. Finma will monitor the bank “very closely”, according to a press release Monday.
The risks are with billions in investments and loans from the investment banking arm of Credit Suisse. Last week, following negotiations with the Swiss government, UBS agreed details of a safety net should these risks translate into major losses at UBS. UBS must bear the first 5 billion Swiss francs in losses itself, after which the Swiss state will step in for an amount of 9 billion francs. The government also provided guarantees worth 100 billion francs, should the merged bank run into payment problems.
The fact that the taxpayer may pay for bankers’ reckless behavior has led to much grumbling in Swiss politics since the bailout was announced in March.
In April, the Swiss parliament voted against the takeover. A symbolic move, because the takeover had been approved through an emergency procedure and could not be reversed. Last week, the Swiss senate agreed to conduct a parliamentary inquiry into the state of affairs – a tool rarely used by the Swiss parliament.
A version of this article also appeared in the newspaper on June 13, 2023.