ZURICH (AFP) – UBS is set to finalise the takeover of Credit Suisse tomorrow, but the hardest part is yet to come: turning the arranged marriage of Switzerland’s biggest banks into a success.
Reassuring the financial markets, customers, employees, the government and the public remains a challenge once the mega-merger is completed.
“From Monday onwards, UBS can start being proactive,” analyst at Swiss investment manager Vontobel Andreas Venditti told AFP.
Switzerland’s largest bank must already have an idea of what bits of Credit Suisse it wants to keep, close or sell, but “so far they were limited in what they could do”, he said.
On June 5, the two Zurich-based banks announced that the merger should be completed on June 12.
A merger this complex could turn out to be a nightmare, particularly given how little time UBS has had.
UBS expects an exceptional accounting gain of nearly USD35 billion due to the difference between the purchase price and the recognised net assets of Credit Suisse.
UBS chief executive Sergio Ermotti has warned the coming months will be “bumpy” for the bank.
Takeover preparations have already brought “a first wave” of emotions and difficult decisions, but “other waves” are still to come, he told the Swiss Economic Forum conference in Interlaken on Friday.
He said jobs would be the trickiest part of the merger, adding that cuts were inevitable given the overlap in some activities.
Like UBS, Credit Suisse was among 30 international banks deemed too big to fail due to their importance in the global banking architecture.
But the collapse of three United States (US) regional lenders in March left Credit Suisse looking vulnerable, and its share price plunged more than 30 per cent during trading on March 15.
The Swiss government, the central bank and financial regulators then stepped in and strong armed UBS into a USD3.25 billion takeover announced on Sunday, March 19, before the markets reopened the following day.
