UBS: Credit Suisse deal poses a ‘major challenge’ – but it won’t alter bank’s strategy
UBS chair Colm Kelleher said the bank’s $3.25bn acquisition of Credit Suisse would not force it to change its strategy over the next few years, but admitted the integration represented a “major challenge”.
Speaking at the bank’s AGM in Basel today, Kelleher said the acquisition was “a new beginning” and brought “huge opportunities ahead for the combined bank and for the Swiss financial centre as a whole”.
“This transaction is financially attractive… I’m convinced we made the right choice,” he said.
However, Kelleher warned that the integration posed “significant execution risk”. It was as a result of those risks, he confirmed, that the bank turned to ex-chief executive Sergio Ermotti.
Ermotti, who was chief executive for nine years up to 2020, was brought back in as chief executive last week. Kelleher said he was “convinced this decision will help deliver a successful integration”.
Outgoing CEO Ralph Hamers also said the acquisition would be a huge challenge, conceding that it would require someone with “a different leadership profile”.
Kelleher said, however, that the deal would not endanger the bank’s strategic plan. “The strategy is clear and unchanged by the acquisition of Credit Suisse,” he said, claiming that the takeover, in fact, “accelerates its implementation”.
UBS has downsized its investment bank in recent years, and concentrated on its wealth and asset management business. In particular, it is trying to expand its business in the US and Asia.
However, some shareholders criticised how the deal, expressing concern that the integration of Credit Suisse would increase the risk faced by UBS.
“UBS is now taking over Credit Suisse’s risk,” one said, demanding that UBS take action to reduce its exposure to Credit Suisse’s risk.
Another shareholder criticised UBS over reports that it allegedly made a $1bn offer for Credit Suisse, labelling it a “very unwise” decision. He said it was “humiliating for Credit Suisse’s board of directors” and “an insult really given the values of Credit Suisse you mentioned in your speech.”
Another said it was “cheek” given UBS’s market value.
They also raised concerns about the possibility of job cuts, with reports suggesting that UBS will cut up to a third of its global workforce. “Those synergies you are referring to could cost 30,000 jobs worldwide”, one shareholder said, demanding that the bank limit the impact of the acquisition on its employees.
While the AGM was taking place, Switzerland’s financial markets regulator, known as FINMA, came out to defended the deal today. FINMA’s chief executive Urban Angerhrn it was “the best option” and “minimised risk of contagion and maximised trust”.
Credit Suisse held its AGM yesterday, with chair Axel Lehmann apologising to shareholders in a fractious meeting.
“The bitterness, anger and shock of all those who are disappointed, overwhelmed and affected by the developments of the past few weeks is palpable,” he said.
The acquisition has proved to be extremely unpopular in Switzerland, with both political parties signalling discontent with the deal. Meanwhile, Swiss prosecutors have also opened an investigation into the takeover.