UBS buys Credit Suisse: key points of agreement between these historic Swiss banks

The purchase of Credit Suisse by UBS will create a banking giant unprecedented in history. Swissa country where banking is an integral part of the national identity.

Below are the highlights of the 3 billion Swiss franc ($3.25 billion) deal struck on Sunday after intense negotiations involving the government, financial regulators and the central bank.

Maintain financial stability

Credit Suissesecond by size swiss bankhas been in a state of instability for two years and is one of 30 financial institutions deemed too big to fail.

“Your fate is thus not only decisive for Swissfor our companies, private clients, their employees, but also for the stability of the entire financial system,” said Swiss President Alain Berset, presenting the agreement.

Finance Minister Karin Keller-Sutter files for bankruptcy Credit Suisse would cause “irreparable economic shocks”.

“For this reason, Swiss must take responsibility beyond their borders,” he said.

“Acquisition Credit Suisse To UBS laid the foundation for greater stability in Switzerland and internationally,” he added.

Colossus of money management

“The merger of the two banks strengthens the position UBS as a global leader in wealth management with more than $5 trillion invested in assets in the most attractive emerging markets,” said the President UBSColm Kelleher.

“It also strengthens the position UBS as a universal banking leader in Swiss and expands our position as the largest Swiss global bank.”

“The combination of the two companies should result in more than $8 billion in annual cost savings by 2027,” UBS said in a statement.

No shareholder vote

Shareholders will receive one share UBS for every 22.48 shares Credit Suisse they own, equivalent to 0.76 Swiss francs per share, below Friday’s closing price of 1.86 Swiss francs.

However, this purchase will not be subject to a shareholder vote in accordance with the agreement reached with the Swiss authorities and other regulators.

The Competition Commission will also have no voting rights in the event of a rare merger between two of Switzerland’s largest banks.

protected deposits

“The merger is expected to be completed by the end of 2023, if possible,” he said. Credit Suisse this is a statement.

Meanwhile, Credit Suisse will continue to implement its restructuring program “in cooperation with UBS”.

FINMA, the Swiss financial regulator, said all bank services will continue without interruption.

“This protects depositors whose accounts, security accounts and other services (meters, ATMs, e-banking, debit and credit cards) will continue to be available,” he said.

Job

UBS will take over Swiss national banking, wealth management and asset management from Credit Suissewhich includes retail banking and loans to small and medium-sized companies.

“UBS intends to cut investment banking business Credit Suisse and align it with our conservative risk culture,” Kelleher said, referring to one of the more risky aspects of Credit Suisse’s portfolio.

But neither Kelleher nor the President Credit SuisseAxel Lehmann went into detail about possible job cuts, although they want the period of uncertainty to be as short as possible.

Liquidity

To facilitate the agreement, the Swiss government provided UBS a CHF 9,999 million guarantee to cover potential losses on certain assets that it will absorb.

The Swiss National (Central) Bank will also provide substantial liquidity support to both banks, up to CHF 100 billion. (AFP)