UBS buys Credit Suisse in government-backed deal
The new business entity will be worth more than $5 trillion, with invested assets worth more than $1.5 trillion. The terms of the deal were not disclosed, but media reports suggest the acquisition will cost $3.25 billion.
The takeover of the beleaguered firm has the full support of the Swiss government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank (SNB).
The SNB says the takeover represents a solution that secures “financial stability and protects the Swiss economy in this exceptional situation”.
Both firms have been granted “unrestricted access” to the central bank’s facilities, the SNB says, through which they can obtain liquidity, as well as the opportunity to apply for a loan worth CHF 100 billion ($107.7m). Credit Suisse can also apply for another similar loan backed by a federal default guarantee.
UBS chair Colm Kelleher says that although acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking is “a good deal” for UBS and its shareholders, “as far as Credit Suisse is concerned, this is an emergency rescue”.
“We have structured a transaction which will preserve the value left in the business while limiting our downside exposure.”
UBS CEO Ralph Hamers says the deal will support the firm’s “growth ambitions” in the Americas and Asia while adding scale to its business in Europe.
UBS benefits from CHF 25 billion ($27bn) of downside protection from the transaction to support marks, purchase price adjustments and restructuring costs, and additional 50% downside protection on non-core assets.