{"id":227525,"date":"2023-03-20T18:48:35","date_gmt":"2023-03-20T18:48:35","guid":{"rendered":"https:\/\/swissfederalism.ch\/ubs-rileva-credit-suisse\/"},"modified":"2023-03-20T20:29:27","modified_gmt":"2023-03-20T20:29:27","slug":"ubs-acquires-credit-suisse","status":"publish","type":"post","link":"https:\/\/swissfederalism.ch\/en\/ubs-acquires-credit-suisse\/","title":{"rendered":"UBS acquires Credit Suisse: a new era begins"},"content":{"rendered":"<h1 class=\"m-article-header__title\"><span class=\"font-377884\">UBS acquires Credit Suisse: a new era begins<\/span><\/h1>\n<h3 class=\"m-article-header__title\"><span class=\"font-377884\"><em>UBS acquires Credit Suisse with Federal Council approval granting a guarantee for additional liquidity support to Credit Suisse from the Swiss National Bank (SNB). The move opens a new era for the banking sector and the entire financial center.<\/em><\/span><\/h3>\n<figure id=\"attachment_227514\" aria-describedby=\"caption-attachment-227514\" style=\"width: 840px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/swissfederalism.ch\/en\/la-sede-di-credit-suisse-a-zurigo-photo-by-credit-suisse-2\/\" rel=\"attachment wp-att-227514\"><img decoding=\"async\" class=\"size-large wp-image-227514\" src=\"https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-1024x775.jpg\" alt=\"La sede di Credit Suisse a Zurigo - Photo by Credit Suisse\" width=\"840\" height=\"636\" srcset=\"https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-1024x775.jpg 1024w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-300x227.jpg 300w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-768x581.jpg 768w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-1536x1162.jpg 1536w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-2048x1549.jpg 2048w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-350x265.jpg 350w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/La-sede-di-Credit-Suisse-a-Zurigo-Photo-by-Credit-Suisse-scaled.jpg 2560w\" sizes=\"(max-width: 840px) 100vw, 840px\" \/><\/a><figcaption id=\"caption-attachment-227514\" class=\"wp-caption-text\"><span class=\"font-377884\">The headquarters of Credit Suisse in Zurich &#8211; Photo by Credit Suisse<\/span><\/figcaption><\/figure>\n<p><span class=\"font-377884\"><strong>Credit Suisse<\/strong> is a Zurich, Switzerland-based bank founded in 1856 by <strong>Alfred Escher<\/strong> operating globally through three divisions (Private Banking, Investment Banking, Asset Management).<\/span><\/p>\n<p><span class=\"font-377884\">After several scandals, the exposure in the failed <em>Archegos<\/em> and <em>Greensil<\/em> funds in 2021, the group experienced huge losses and has not recovered. Last November S&amp;P downgraded the rating to Bbb-.<\/span><\/p>\n<p><span class=\"font-377884\">On <strong>Sunday, March 19, 2023<\/strong> after long negotiations came the deal: Ubs buys Credit Suisse for 3 billion Swiss francs in shares. The Federal Council approves this decision and considers it an important contribution to the stability of the financial market. In order to ensure the continuation of Credit Suisse&#8217;s operations until the implementation of the acquisition and to reduce costs for the Swiss economy, the Executive decided on additional liquidity measures:<\/span><\/p>\n<ul>\n<li><span class=\"font-377884\">as a first measure, the Federal Council created the necessary legal basis for the SNB to grant Credit Suisse additional liquidity supports. Concretely, for these supports the Executive introduced a privilege in bankruptcy. This gives the SNB the security it needs to be able to make this substantial additional liquidity available to Credit Suisse should the need arise;<\/span><\/li>\n<li><span class=\"font-377884\">in order to guarantee Credit Suisse sufficient liquidity at all times, as a second measure the Federal Council decided to grant the SNB a guarantee in the event of failure. Both measures are governed by Articles 184 and 185 of the Federal Constitution (right of necessity).<\/span><\/li>\n<\/ul>\n<p><span class=\"font-377884\">These measures complement the instruments already available to the SNB to strengthen the liquidity of banks, which include in particular the ordinary liquidity support provided in emergency situations (ELA, &#8220;Emergency Liquidity Assistance&#8221;).<\/span><\/p>\n<p><span class=\"font-377884\">The Federal Council believes that such measures are the most appropriate way to increase market confidence in Credit Suisse and the Swiss financial center. Similar instruments exist in the United States, the EU and the United Kingdom.<\/span><\/p>\n<p><span class=\"font-377884\">In order to reduce possible risks to UBS, the federal government is granting UBS a guarantee in the order of 9 billion francs to assume potential losses from certain assets that UBS would take back as part of the transaction, should these potential losses exceed a certain threshold.<\/span><\/p>\n<p><span class=\"font-377884\">The Executive asked the Finance Delegation of the Federal Chambers for an urgent commitment credit approved on Sunday, March 19, 2023.<\/span><\/p>\n<p><span class=\"font-377884\">The decided measures ensure that the SNB can make sufficient liquidity available to Credit Suisse if needed. Obtaining liquidity support is subject to strict conditions. In addition, according to Article 10a of the Banking Act, the Federal Council will also order measures concerning remuneration.<\/span><\/p>\n<p><span class=\"font-377884\">The Executive has taken measures to contain the risks to the federal government as much as possible. Therefore, Credit Suisse will have to pay a risk premium to both the federal government and the SNB. It will also have to pay a premium for the provision of collateral in the event of default to the federal government and interest to the SNB. From these measures and the privilege in bankruptcy, there is little risk of dissolution for the federal government.<\/span><\/p>\n<p><span class=\"font-377884\">The SNB&#8217;s existing and new liquidity supports are sufficient, together with the liquidity reserves available to Credit Suisse, to ensure sufficient liquidity for the institution. With this set of measures, the Federal Council reaffirms its willingness to take the necessary steps to protect depositors and the stability of the Swiss financial center.<\/span><\/p>\n<figure id=\"attachment_227518\" aria-describedby=\"caption-attachment-227518\" style=\"width: 840px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/swissfederalism.ch\/en\/il-quartier-generale-di-ubs-a-zurigo-photo-by-ubs-2\/\" rel=\"attachment wp-att-227518\"><img decoding=\"async\" class=\"size-large wp-image-227518\" src=\"https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS-1024x675.jpg\" alt=\"Il quartier generale di UBS a Zurigo - Photo by UBS\" width=\"840\" height=\"554\" srcset=\"https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS-1024x675.jpg 1024w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS-300x198.jpg 300w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS-768x506.jpg 768w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS-350x231.jpg 350w, https:\/\/swissfederalism.ch\/wp-content\/uploads\/2023\/03\/Il-quartier-generale-di-UBS-a-Zurigo-Photo-by-UBS.jpg 1250w\" sizes=\"(max-width: 840px) 100vw, 840px\" \/><\/a><figcaption id=\"caption-attachment-227518\" class=\"wp-caption-text\"><span class=\"font-377884\">The headquarters of UBS in Zurich &#8211; Photo by UBS<\/span><\/figcaption><\/figure>\n<h2><span class=\"font-377884\">A not entirely painless transition<\/span><\/h2>\n<p><span class=\"font-377884\">Ubs&#8217; rescue of Credit Suisse does not seem to convince European markets: investors&#8217; fear is that there will be a domino effect involving other banks.<\/span><\/p>\n<p><span class=\"font-377884\">The UBS buyout incorporates a massive write-down of Credit Suisse shares in the range of 60 percent. In the morning of Monday, March 20, the Swiss bank&#8217;s shares, which closed at 1.86 francs a share on Friday, worth about 28 billion, reached 0.75 francs and a value of about 16 billion Swiss francs.<\/span><\/p>\n<p><span class=\"font-377884\">According to BAK Economics, the acquisition of Credit Suisse by UBS avoids serious damage to the Swiss economy, and the negative effects remain largely limited to the banking sector. The rationalization potential of the two banks is around 9,500 to 12,000 jobs. The deal, according to BAK Economics, will have limited effects on Switzerland&#8217;s GDP, which is still expected to grow by 0.7 percent this year and 1.6 percent in 2024.<\/span><\/p>\n<p><span class=\"font-377884\"><a href=\"https:\/\/swissfederalism.ch\/en\/cheap-over-good-bad-news-eurozone-banks\/\"><strong>Cheap is over: Good and bad news for eurozone banks<\/strong><\/a><\/span><\/p>\n<h2><span class=\"font-377884\">The new UBS<\/span><\/h2>\n<p><span class=\"font-377884\"><strong>UBS<\/strong> was created in 1998 through the merger of <em>Union of Swiss Banks<\/em> and <em>Swiss Bank Corporation,<\/em> but the official founding date goes back to 1862, when the Bank of Winterthur, was founded and has its roots in as many as 370 separate financial institutions that have followed over the years. Two years after the merger, in 2000, UBS acquired the U.S.-based <em>Paine Webber Group<\/em>, transforming it into the <strong>world&#8217;s largest private bank.<\/strong><\/span><\/p>\n<p><span class=\"font-377884\">The acquisition of Credit Suisse will strengthen UBS&#8217;s position as the<strong> world&#8217;s largest wealth manager,<\/strong> with $5 trillion in invested assets, and enhance its growth ambitions in the Americas and Asia by opening a new era.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>UBS acquires Credit Suisse with Federal Council approval granting a guarantee for additional liquidity support to Credit Suisse from the Swiss National Bank (SNB). The move opens a new era for the banking sector and the entire financial center.<\/p>\n","protected":false},"author":9,"featured_media":227519,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[256,985,260,210,305,257],"tags":[502,795,404,263,887],"class_list":["post-227525","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-finance","category-highlights","category-magazine","category-politics","category-switzerland","tag-bank","tag-economy","tag-finance","tag-future","tag-switzerland-en"],"_links":{"self":[{"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/posts\/227525","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/comments?post=227525"}],"version-history":[{"count":2,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/posts\/227525\/revisions"}],"predecessor-version":[{"id":227527,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/posts\/227525\/revisions\/227527"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/media\/227519"}],"wp:attachment":[{"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/media?parent=227525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/categories?post=227525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swissfederalism.ch\/en\/wp-json\/wp\/v2\/tags?post=227525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}