NOW THIS: UBS Group AG rescues Credit Suisse Group AG

UBS has agreed to buy its ailing rival Credit Suisse Group AG for 3 billion Swiss francs ($3.25 billion) to prevent further market-shaking turmoil in the global banking system. The Swiss government brokered the UBS-Credit Suisse merger deal.

The combination of the two biggest and best-known Swiss banks is expected to create a business with more than $5 trillion in total invested assets and sustainable value opportunities. The combination of the two banks, each with a storied history dating to the mid-19th century, is expected to generate an annual run rate of cost reductions of more than $8 billion by 2027.

“Past big bank rescues show that the result can be excruciatingly difficult for the rescuer (Bank of America Corp.’s deal to buy Merrill Lynch or Lloyds TSB’s purchase of Halifax Bank of Scotland), and this explains why UBS (itself formed by the mega-merger of Union Bank of Switzerland and Swiss Bank Corp. 25 years ago) has driven a hard bargain,” said Prof. Dr. Amarendra Bhushan Dhiraj, Executive Chair and CEO at the CEOWORLD magazine. “But they can also work out well. For example, JPMorgan Chase acquired Bear Stearns and the Washington Mutual branch network during 2008.”

Colm Kelleher will be Chairman, and Ralph Hamers will be the Group Chief Executive Officer of the combined entity.

UBS Group Chief Executive Officer Ralph Hamers said: “Bringing UBS and Credit Suisse together will build on UBS’s strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities. The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”

Colm Kelleher, chairman of UBS Group AG, said: “This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors.”

Colm Kelleher was elected Chairman of UBS in April 2022. He served as President of Morgan Stanley until retiring from that firm in 2019.

2016 – 2019: President Morgan Stanley, responsible for Institutional Securities and Wealth Management
2011 – 2016: CEO of Morgan Stanley International, Morgan Stanley
2013 – 2015: President, Institutional Securities, Morgan Stanley
2010 – 2012: Co-President, Institutional Securities, Morgan Stanley
2007 – 2009: CFO and Co-Head Corporate Strategy, Morgan Stanley
2006 – 2007: Head Global Capital Markets, Morgan Stanley
2004 – 2006: Co-Head Fixed Income, Europe, Morgan Stanley
1989 – 2004: Various roles, Morgan Stanley

Ralph Hamers has been Group Chief Executive Officer of UBS Group AG and President of the Executive Board of UBS AG since November 2020.

2020 – date: Group Chief Executive Officer, UBS Group AG and President of the Executive Board, UBS AG
2013 – 2020: CEO and Chairman of the Executive Board, ING
Supervisory Board member of NN Group (2014 – 2015);
Chairman Management Board Banking (2013 – 2020) and
Chairman Management Board Insurance (2013 – 2014)
2011 – 2013: CEO of ING Belgium and Luxembourg, ING
2010 – 2011: Head of Network Management for Retail Banking Direct & International, ING
2007 – 2010: Global Head of the Commercial Banking network, ING
2005 – 2007: CEO of ING Bank Netherlands, ING
2002 – 2005: General Manager of the ING Bank branch network, ING

European Central Bank President Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.” She reiterated that the European banking sector is resilient, with strong financial reserves and plenty of ready cash. The banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation, she said.

The Swiss government is providing more than 100 billion francs to support the takeover.

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