BASEL, SWITZERLAND (AFP) – UBS chiefs told shareholders yesterday that the Swiss bank’s emergency takeover of beleaguered rival Credit Suisse was a “Herculean task” strewn with risks, but still the right decision.
Switzerland’s biggest bank is absorbing its stricken rival in a deal stitched together in double-quick time on March 19 out of fears of a global banking crisis if the floundering Credit Suisse went under.
Shareholders of both banks had no say in the mega-merger, which was engineered behind closed doors by the Swiss government, the central bank and the financial regulators FINMA.
UBS Chairman Colm Kelleher told the bank’s annual general meeting in Basel that although the takeover was sprung upon them, it would offer stability.
“Whilst we did not initiate these discussions, we believe that this transaction is financially attractive for UBS shareholders. I am convinced we made the right choice,” he insisted.
“Stabilising the situation required urgent action, leaving no time to consult shareholders. I understand that not all stakeholders of UBS and Credit Suisse are pleased with this approach.”
UBS will become a banking colossus, with USD5 trillion of invested assets.
Kelleher said the deal was expected to close within a few months and would preserve the critical financial sector as a pillar of Swiss national prosperity.
But he warned: “You cannot just put numbers together and reach a sum. You have to understand that there is a huge amount of risk in integrating these businesses.”
A series of scandals at Credit Suisse saw investor confidence plummet after three United States regional banks collapsed in early March.
The Ethos foundation, which represents pension funds in Switzerland and owns stakes in both banks, said UBS shareholders wanted to know precisely what they were taking on with Credit Suisse, which repeatedly got itself into trouble.
“You are buying a bank without doing due diligence,” its director Vincent Kaufmann told AFP.
“As UBS shareholders, we don’t know what’s in the closets.”
In all, 1,128 UBS shareholders attended the AGM in Basel’s St Jakobshalle indoor arena.
The meeting saw Dutch chief executive Ralph Hamers bow out, with Sergio Ermotti returning as Chief Executive Officer.
Ermotti ran UBS between 2011 and 2020, having been brought in to restructure and stabilise the bank after its state bailout during the 2008 global financial crisis.
Colm Kelleher said he felt the Swiss banker would be the “better pilot” for the bank’s new flight path.
