One after UBS has made the takeover of Credit Suisse effective, the new giant bank warned that the process will lead to the implementation of “difficult decisions”, according to the entity’s CEO, Sergio Ermotti, who takes com week or reference to the “mass reduction” implemented in investment banking during his first tenure at UBS.
In this way, the CEO recognizes in an opinion article published by the Swiss robot ‘Tags-anzeiger’ that the real one is working now, at a time when the perspectives of ubs are better than ever and although it would have been desirable for the circumstances in which this acquisition took place were consequently different.
In this, I admit that they face a “demanding” task according to Ermotti, for whom the question of what will happen to the Swiss business of Credit Suisse “must be well thought out.” Ermotti recalls that both banks have massively reduced their balances since the 2008 financial crisis, citing his first term as UBS CEO as an example, which was characterized by a “massive reduction of the investment bank.”
New giant bank with less risk
For their part, from UBS they indicate that “these strategic definitions, which we will now also implement for Credit Suisse, will reduce the risks of the combined bank for Switzerland. There are even more opportunities for this,” he points out. Last Monday, UBS announced that it had completed the acquisition of its great rival, Credit Suisse, thus putting an end to almost three months of uncertainty since on March 19, with the intervention of the Swiss authorities, the parties agreed to the biggest bank merger in europe since the financial crisis.
The culmination of the transactions thus put an end to Credit Suisse’s 167-year history, giving rise to a new banking giant, which will publish its consolidated financial results for the second quarter of 2023 on August 31, 2023.
Public guarantee if losses exceed 5,000 million
9,000 million Swiss francs (9,256 million euros) in possible losses of a portfolio of Credit Suisse assets after the acquisition is completed.
Specifically, the public guarantee will take effect “only if the losses derived from the realization of these assets exceed 5,000 million Swiss francs (5,142 million euros)” and will be limited to a maximum of 9,000 million francs. Thus, UBS will bear the impact of the first 5 billion Swiss francs of realized losses on a designated portfolio of Credit Suisse non-core assets, equivalent to approximately 3% of the combined assets of the merged bank and comprising mainly loans, derivatives, legacy assets and structured products from Credit Suisse’s non-core unit.
The European Commission occurred on May 25 without conditions the merger between the Swiss financial institutions with the European economy (EEA).