She therefore wanted to seek talks with Klein, according to a report by the Financial Times on Tuesday evening, which cited insiders as the source. UBS has hired a legal team to examine how the contract between Credit Suisse (CS) and Klein could be terminated in the most cost-effective way, the report said. UBS and CS declined to comment to the newspaper, as did a spokesman for Klein.
“The deal was closed when the selling bank got a gun on its chest,” a source close to UBS told the paper. However, it cannot be the case that Klein “enriches itself at the expense of our shareholders”. Immediately after the deal became known, UBS signaled that it wanted to hold on to Credit Suisse’s investment banking advisory business after taking over its rival. Strategic “global banking” areas would be retained, it said. “Global Banking” is what UBS calls its business of supporting companies with takeovers and mergers or IPOs.
Even then, the question arose as to whether Credit Suisse’s spin-off plans were off the table. CS had previously announced that it would outsource the capital markets and consulting business under the name CS First Boston and later list it on the stock exchange. Former CS board member Michael Klein was to take over the management of the new CS First Boston.
Part of the plans was also the purchase of the Klein Group by CS for around 175 million US dollars. It was precisely this multi-million dollar purchase of the US company with only around 40 experts that caused a great deal of discussion. When asked by the AWP news agency on Monday, Credit Suisse did not want to comment on whether this deal could now burst.
UBS plans to buy back two bail-in bonds
Major Swiss bank UBS has made a buyback offer for certain bail-in senior unsecured bonds. Two long-term bonds, which were only issued last Friday, are to be purchased for cash. UBS is launching the buyback offer shortly after the emergency takeover of Credit Suisse and the associated “extraordinary” measures announced on Sunday, according to a statement on Wednesday. The latest developments would initially be assessed cautiously and therefore it was decided to take this measure.
The offers will run from this Wednesday until the early expiry date of March 28, 2023 and the final expiry date of April 4, 2023.
When taking over the struggling Credit Suisse, UBS is supported with state guarantees to compensate for certain possible losses.
UBS wants to stop spinoff of Credit Suisse investment bank
After the deal to take over Credit Suisse, UBS wants to put a stop to the planned spin-off of parts of the investment bank into CS First Boston. As the Financial Times reports, UBS has entered into talks with Michael Klein, who should have become involved in and lead the new company.
After a series of scandals, Credit Suisse announced last year that it would spin off the advisory business of its investment banking activities into a new entity under the revived CS First Boston brand name. She also entered into an agreement to acquire M. Klein & Company’s investment banking business for $175 million, which would be integrated into CS First Boston. Klein, in turn, was to become CEO of the new entity.
But UBS executives believe the deal is mostly beneficial for Klein itself, and there are some areas of value worth holding. “We assume that Klein has picked the cherry on the cake,” the Financial Times quoted a person familiar with the events as saying. “The deal was made when the selling bank had a gun to its chest and we are not in that position now. We are not here to make Michael Klein even richer to the detriment of our shareholders.”
Credit Suisse had also planned to bring other shareholders on board. According to reports, negotiations were ongoing with the financial investor Apollo. In perspective, CS First Boston should go public.
According to the Financial Times, UBS is now examining how the deal negotiated between Credit Suisse and Klein can be wound up in the cheapest possible way. “First Boston may not be what it should be” if the parent company goes away, a person close to Klein told the newspaper. The transaction could not be completed on the negotiated terms. Klein has always acted in the best interests of Credit Suisse shareholders and contacted UBS immediately after the merger became known.
UBS and Credit Suisse declined to comment to the newspaper, as did a spokesman for Klein.
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