March 20, 2023/Bloomberg
Global Investment Banking Group UBS in a historic deal acquired Credit Suisse (CS) for US$3.25bn. According to reports from Bloomberg, UBS Group AG agreed to buy Credit Suisse Group AG in a government-brokered deal aimed at containing a crisis of confidence that threatened to spread across global financial markets.
Despite the deal, there are still concerns across the global financial markets, from the issues of financial system stability to market confidence from investors.
Bloomberg noted that the early calm in Asian markets on Monday quickly gave way to fresh jitters about the outlook for the global financial system, and investors and strategists are bracing for further tumult.
Global financial analyst Mohammed El-Erian in an interview on Bloomberg, said “The UBS Group AG’s rushed deal to buy beleaguered rival Credit Suisse Group AG wasn’t the best solution, but was the most reasonable of the options available.”
With the deal, UBS plans to shrink the investment bank and take significant cost-cutting decisions. Additional details of the deal revealed that the Swiss Government provided a $100bn liquidity line, while UBS acquired CS for a 75% discount.
The Chairman of UBS in his statement said, “The combination of the two banks further strengthens UBS’s position as a leading global wealth manager with more than US$5 trillion in total invested assets operating in the most attractive growth markets.”
From reports, the UBS takeover of Credit Suisse will not be subject to a shareholder vote, following an agreement reached with the Swiss authorities and other regulatory authorities. The Competition Commission will also have no say in the exceptional merger between the country’s two biggest banks.