UBS and Credit Suisse, the two main Swiss banks, officially began their merger process this Thursday with the approval of their boards of directors. This procedure takes place after the first acquired the second on March 19 and this purchase was completed on June 12.
The merger is the first in the world between two banks considered to be of systemic importance. It will conclude with the disappearance of Credit Suisse as an independent brand, after 167 years of history. “Following the approval of each of the Boards, both entities enter into a definitive Merger Agreement”, indicates a statement from UBS, where this process must be submitted to the approval of several regulators throughout next year 2024.
Credit Suisse was acquired by UBS in March of this year, at the request of the Swiss Government, as an emergency measure to resolve the serious financial and image crisis that the first entity was going through, after years of bad investment decisions and months of collapse of its stock market value. The merger will mean a large reduction in the combined workforce of UBS and Credit Suisse, currently made up of around 120,000 people worldwide, although the total number of jobs that will be eliminated is still unknown. For now, the combined group’s workforce was reduced by more than 4,000 in the quarter and by around 13,000 compared to the overall pro forma combined base at the end of 2022.
Initial losses
For its part, UBS recorded losses of 785 million dollars (731 million euros) in the third quarter of the year as a result of the integration costs of Credit Suisse. Which represents the first quarter in ‘red numbers’ for the entity since 2017 and contrasts with the attributable net profit of 1,733 million dollars (1,614 million euros) for the same period in 2022.
In this sense, UBS indicated that between July and September it assumed an adverse impact of 2,003 million dollars (1,866 million euros) in relation to the integration of Credit Suisse, adding that its underlying result, excluding the impact of the merger, would be 844 million dollars (786 million euros).
Optimism despite difficulties
“We are executing the Credit Suisse integration at a good pace and have achieved underlying profitability for the group in the first full quarter since the acquisition,” said Sergio Ermotti, CEO of UBS. “We are optimistic about our future as we build an even stronger and more secure version of the UBS that was called upon to stabilize the financial system in March and of which all our key stakeholders can be proud,” he added.
In the first nine months of its fiscal year, UBS obtained an attributable net profit of 29,235 million dollars (27,231 million euros), which represents almost five times more than the result of 5,977 million dollars (5,567 million euros) year after anus. by the entity a year earlier, while its turnover increased by 13% year-on-year, up to 29,979 million dollars (27,924 million euros).
