The wedding between the 2 largest banks in Switzerland, UBS and Credit score Suisse, was consummated this Monday, lower than three months after the Swiss authorities promoted the operation.
UBS confirmed on Monday the acquisition of Credit score Suisse, lower than three months after saying this operation to keep away from the approaching chapter of what was the second largest financial institution in Switzerland, dragged by a panic motion amongst traders.
The Swiss authorities urged UBS to purchase Credit score Suisse, thought-about a systemic threat financial institution for the nationwide financial system, and for this provided a assure of about 9,000 million euros, whereas the Swiss Nationwide Financial institution placed on the desk greater than 200,000 million of euros in loans of varied varieties.
The brand new entity could have a market worth of 1.54 trillion euros, the dimensions of Spain’s GDP or virtually double the Swiss GDP.
Traders reacted positively to the information this morning, which was mirrored within the appreciation of round 1.1% of UBS shares, whereas the Zurich Inventory Trade index on which it’s listed rose solely 0.47 %.
Concurrently, Credit score Suisse shares rose 1% and traded at 0.82 Swiss franc cents (0.84 euros).
A 12 months in the past, the financial institution’s shares have been buying and selling at 6.3 Swiss francs, three years in the past at 9.7 francs and 5 years in the past at 15.7 francs, even supposing even then its picture suffered appreciable deterioration resulting from its mismanagement and the scandals wherein it was concerned.
Right this moment’s buying and selling day is the final on the Zurich Inventory Trade for Credit score Suisse, which may also be launched from the New York inventory market, the place it was traded by means of the so-called American Depositary Shares (depository shares).
UBS and the Swiss Authorities signed a state assure contract three days in the past for a price of 9,000 million francs (9,200 million euros) in opposition to the eventual losses that this transaction may trigger, though this support will solely change into efficient as soon as the federal government itself buying financial institution has suffered a lack of as much as 5 billion francs.
The assure applies to a particular Credit score Suisse portfolio which might characterize 3% of UBS’s complete property on the finish of the acquisition and which consists of spinoff merchandise, structured merchandise, credit and non-strategic devices, which weren’t a part of the core enterprise of Credit score Suisse.
Based on Swiss analysts, this portfolio can be valued at round 50,000 million euros and the losses it may generate could possibly be round 10% of that quantity, which might be what UBS itself has promised to soak up.