UBS confirmed the acquisition of Credit Suisse on Monday as reports suggest Credit Suisse bankers will face tight restrictions on their activity.
In an open letter published in the NZZ newspaper, UBS confirmed that “we have finalised the legal takeover of Credit Suisse.”
Chief executive Sergio Ermotti and chair Colm Kelleher said “this is the start of a new chapter – for UBS, Switzerland as a financial centre and the global financial industry.”
Although the bank warned of challenges, it also argued there were “many opportunities” in the deal. “We will bring together the collective expertise, scale and wealth management leadership of both UBS and Credit Suisse to create an even stronger combined firm,” the firm said.
Credit Suisse was taken over by UBS in a state-brokered deal back earlier this year. Years of scandal had taken their toll on Credit Suisse, which saw mass clients outflows and a consistent share price decline.
Reflecting concerns about Credit Suisse’s willingness to take on more risk, UBS is set to impose tight restrictions on Credit Suisse bankers with UBS executives drawing up a list of “red lines”. The news was reported by the Financial Times.
The restrictions, which come into force from today, include a ban on clients from high-risk countries, such as Libya, Sudan and Russia, and launching complex financial products.
In the open letter UBS said it would “never compromise” on its “strong culture, conservative risk approach or quality service”.
The completion of a loss protection agreement worth CHF9bn (£8bn) with Swiss authorities last week paved the way for the deal’s finalisation.
Tens of thousands of jobs are thought to be at risk over the coming months as the lender completes the most complex banking merger since the financial crisis.
Speaking to Swiss media on Monday, Ermotti said that 10 per cent of Credit Suisse’s workforce had left already. The Financial Times reported that five senior ex-Credit Suisse bankers left the bank shortly after the deal was concluded. This included Credit Suisse’s ex-chief financial officer Dixit Joshi.
All in all, UBS estimates that it will take a $17bn hit from the takeover of Credit Suisse, resulting from a $13bn hit from fair value adjustments and $4bn in potential litigation and regulatory costs.