The Zurich Stock Exchange ‘buries’ Credit Suisse. The Swiss bank and reference in the management of great fortunes closes a chapter of 167 years of history as a bank, which includes ceasing to trade under that brand to do so under the umbrella of UBS starting next Tuesday, June 13. If everything goes according to plan, the purchase of the second by the first will be completed next Monday, June 12, when a new financial giant will enter the scene, whose balance will amount to 1.6 trillion dollars -double the GDP from Switzerland-.
The agreement agreed during a weekend of vertigo by both entities valued the operation in an exchange of shares of a UBS title for every 22.48 of Credit Suisse, in an operation that in its beginnings was valued at 3,041 million Swiss francs (around of 3,130 million euros). However, after the modest rise of 5.4% experienced by UBS between March 16 and this Thursday (6.1% in the year), up to 18.25 Swiss francs, the figure now rises to 3,249 million . That is to say, at the close of the markets yesterday it will have to pay 208 million more than those initially contemplated.
The formula reduces the more than 4,000 million Credit Suisse titles in circulation to less than 179 million, the equivalent of 5% of the capital at the time of the operation, which must now be distributed among a shareholder whose main positions are in the National Bank Saudi (9.8%), the sovereign wealth fund of Qatar (6.8%), Olayan (3.15%), Vanguard (2.95%) and Blackrock (2.82%). For this work of accounting engineering, the absorbing firm has chosen to avoid the capital increase and will pull the shares it owns in treasury stock.
Price in New York of Credit Suisse, in dollars
To do this, it has made changes within the framework of its two-year repurchase plan (2022-2024) and will adapt it to carry out this purchase, using some securities instead of amortizing them. To this must be added the American Depositary Shares (ADS), which will cease to be listed on the New York Stock Exchange on Monday if the process materializes before the opening of Wall Street, otherwise they will do so on Tuesday, as well as all the issues of Credit Suisse’s debt, which will also be denominated under the ‘UBS brand’. At the controls of this plan is a new team led by Sergio Ermotti, whom Colm Kelleher, president of UBS, has rescued twelve years after his departure from the advisory bank as delegate and chief executive of the merger.
Among the names of the new leadership, the Spanish Beatriz Martín Jiménez stands out, who will arrive from London, where she has led the bank in the United Kingdom since the departure of Andrea Orcel in 2018, and will become the president of the Europe and East region media. She will be in charge of integrating the activities of Credit Suisse. Among the most important challenges that she faces is the restructuring of the more than 100,000 employees that together add up worldwide, a figure that may have varied after the trickle of departures in recent months in the midst of the bank transfer war.
Among them, the escape of three Credit Suisse bankers who advised Julius Baer to Spanish fortunes stands out, later they published ‘Bloomberg’ this Thursday, although their names have not been disclosed. The movements occur after UBS backed down and confirmed that it would keep the private banking business of its new purchase in Spain, despite the fact that the entity abandoned this segment by selling it to Singular Bank and maintains a non-competition agreement.
The hunt for bankers has also occurred in reverse, since according to the aforementioned agency, UBS is finalizing the hiring of Jin Yee Young, one of Deutsche Bank’s star bets. Young has headed the private banking division of the German firm since last January after almost two decades at Credit Suisse, so he would now “come back” home after this brief career.
The new chiefs estimate that the entire process, which can take years, will cost around 17 billion dollars, of which 13 billion will be used to carry out adjustments. The other 4,000 million are reserved for litigation and regulatory costs. The group is facing several lawsuits over the design of the bailout as it reduced to zero the price of AT1 bonds, known as Cocos, valued at 16 billion Swiss francs, which have been written off.
A logistics company will replace CS in the SMI
Given these events, the Zurich floor has already planned who will be the replacement for CS in the Swiss Market Index (SMI), the Swiss stock market reference. This is the logistics firm Kuehne+Nagel, which will make the leap to this index on June 13, thus joining the 20 companies with the highest market capitalization in the country, including UBS.
The SMI is one of the most lagging indices of the Old Continent in the annual calculation with an increase of 5.4%, weighed down precisely by Credit Suisse, which has lost practically 70% of its capitalization and is moving around 0 .75 -0.8 Swiss francs since the absorption ‘in extremis’ is achieved. Now UBS faces the new stage with a potential of 16.1%, up to 21.1 Swiss francs, with half the consensus in favor of buying and 30% opting for the option to hold.