UBS suffers after Credit Suisse rescueUBS Group AG’s Chief Executive Sergio Ermotti has reportedly shortlisted key Credit Suisse Group AG executives to join the management team as the Swiss bank giant prepares to finalize its merger with the struggling rival, according to the Financial Times.
The imminent merger, set to be completed by the end of May or early June, is expected to create a dominant banking institution with over $5 trillion in invested assets.
UBS’s strategic plans for Credit Suisse’s Swiss unit
As the merger approaches, UBS is exploring options for Credit Suisse’s Swiss unit. Among the alternatives being considered are retaining the unit’s investment banking operations while selling off the remainder of the business, potentially through an initial public offering (IPO).
Credit Suisse’s Swiss bank, regarded as the crown jewel of the lender, generated a pre-tax income of 1.5 billion Swiss francs ($1.7 billion) in 2022.
Dixit Joshi, chief financial officer, Francesca McDonagh, chief operating officer, and André Helfenstein, head of the Swiss business, are believed to be among the executives most likely to remain a part of the Swiss bank’s executive team following the merger. Both UBS and Credit Suisse declined to comment on the report.
UBS agreed in March to acquire its rival for 3 billion Swiss francs ($3.37 billion), with the deal also including the assumption of up to 5 billion in losses. The acquisition was quickly arranged by Swiss authorities in response to Credit Suisse’s financial struggles.
Potential job cuts and market concerns
While the merger is expected to solidify UBS’s position in the Swiss loan market, it has also raised concerns among lawmakers about the potential reduction in competition.
Ermotti has acknowledged that job cuts are unavoidable, although it is too early to determine the exact number of positions that will be affected.
The future of Credit Suisse’s business in Switzerland remains a key strategic decision for UBS. Stripping out the investment banking operations would reverse a move made just a few months ago when Credit Suisse transferred the business from its broader investment banking division into the Swiss unit, as detailed in the lender’s 2022 annual report.
As the merger deadline approaches, UBS is moving forward with its strategic planning and leadership decisions, aiming to create a banking powerhouse that dominates the Swiss loan market.
With key Credit Suisse executives poised to join the management team and potential changes to the Swiss unit’s operations, the future of the merged institution remains a hot topic in the financial world.
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