The credit ratings were initially confirmed as A- or A-2.
The Swiss government announced on Sunday evening that UBS would take over the ailing Credit Suisse (CS) for $3.25 billion. The first mega-merger of systemically important global banks since the financial crisis in 2008 is intended to help stop the dangerous loss of confidence in the global banking system.
However, given the size and weaker credit profile of CS, and the complexity of unwinding much of the bank’s investment banking business, S&P rating analysts see significant execution risk in integrating CS into UBS.
Due to the very high financial buffer resulting from the transaction and the massive liquidity support from the Swiss Central Bank (SNB), there are sufficient buffers to effectively limit any risks that arise.
The Swiss Central Bank (SNB) had announced that it would support the takeover of Credit Suisse by UBS with liquidity assistance of up to CHF 100 billion. The Swiss government plans to set aside more than CHF 9 billion for potential losses that UBS may incur from the purchase.
According to S&P, the negative outlook for the ratings reflects the pressure on the creditworthiness of the UBS Group in connection with the execution risk from the integration.
On the SIX Swiss stock exchange, UBS shares temporarily gained 3.78 percent to CHF 17.98 on Tuesday.
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