UBS has agreed to acquire Credit Suisse in a $3.3bn merger deal, backed by the Swiss government authorities, to restore confidence in the Swiss economy and banking system.
The agreement follows intervention by the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority FINMA.
Under the terms of the merger agreement, Credit Suisse shareholders are expected to receive one share of UBS common stock, in exchange for 22.48 Credit Suisse shares held.
The business combination will create a global wealth management company, with about $5 trillion of invested assets and extends UBS’ footprint in the Swiss home market.
It is expected to generate an annual run-rate of cost reductions of more than $8bn by 2027.
Credit Suisse will continue its business operations until the closing of the merger, which is expected by the end of this year, and implement its restructuring together with UBS.
Credit Suisse Board of Directors chairman Axel P Lehmann said: “Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.
“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute its new strategy, we are forced to reach a solution today that provides a durable outcome.”
The acquisition is enabled by an emergency ordinance issued by the Swiss Federal Council.
The merger will be implemented without the approval of the shareholders of both companies.
UBS chairman Colm Kelleher and chief executive officer Ralph Hamers will become Group CEO of the combined entity.
Colm Kelleher said: “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.”
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.
Last week, Credit Suisse said it will borrow up to CHF50bn ($54bn) from the Swiss National Bank (SNB) to strengthen its liquidity after the collapse of Silicon Valley Bank.
