20th March 2023 – (Zurich) UBS has announced plans to acquire Credit Suisse in a landmark deal that will create a business with more than US$5 trillion in total invested assets. The acquisition will further strengthen UBS’s position as the leading Swiss-based global wealth manager, operating in the most attractive growth markets.
The acquisition is seen as an emergency rescue for Credit Suisse, whose capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction is expected to bring benefits to clients and create long-term sustainable value for investors.
Under the terms of the all-share transaction, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to CHF 0.76/share for a total consideration of CHF 3 billion. UBS benefits from CHF 25 billion of downside protection from the transaction to support marks, purchase price adjustments and restructuring costs, and additional 50% downside protection on non-core assets.
The combination of the two businesses is expected to generate annual run-rate of cost reductions of more than US$8 billion by 2027. UBS anticipates that the transaction is EPS accretive by 2027 and the bank remains capitalised well above its target of 13%.
Both banks have unrestricted access to the Swiss National Bank existing facilities, through which they can obtain liquidity from the SNB in accordance with the guidelines on monetary policy instruments. The combined investment banking businesses accounts for approximately 25% of Group risk weighted assets.
The discussions were initiated jointly by the Swiss Federal Department of Finance, FINMA and the Swiss National Bank, and the acquisition has their full support. The transaction is not subject to shareholder approval, and UBS has obtained pre-agreement from FINMA, Swiss National Bank, Swiss Federal Department of Finance and other core regulators on the timely approval of the transaction.
UBS Chairman Colm Kelleher said the acquisition is attractive for UBS shareholders but, as far as Credit Suisse is concerned, it is an emergency rescue. UBS CEO Ralph Hamers said bringing the two banks together will enhance their ability to serve clients globally and deepen their best-in-class capabilities.
The acquisition is expected to create a leading asset manager in Europe, with invested assets of more than US$1.5 trillion. Colm Kelleher will be Chairman and Ralph Hamers will be Group CEO of the combined entity.
With a combined total of over USD 5 trillion in invested assets, the new entity is expected to become a leading asset manager in Europe and strengthen UBS’s position as the leading Swiss-based global wealth manager. The deal is fully supported by regulators, and both banks have unrestricted access to Swiss National Bank facilities.
