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UBS plans to acquire Credit Suisse, aiming to create a leading global wealth manager with over USD 5 trillion in invested assets. This strategic move enhances UBS's position in Switzerland and expands its market presence in the Americas and Asia-Pacific. The all-share deal provides Credit Suisse shareholders with CHF 0.76 per share, totaling CHF 3 billion. UBS anticipates annual cost reductions exceeding USD 8 billion by 2027 and claims the transaction is EPS accretive by 2027. Regulatory bodies, including the Swiss National Bank, support this acquisition, which does not require shareholder approval.
Positive
Creates a leading global wealth manager with over USD 5 trillion in invested assets.
Annual run-rate cost reductions of more than USD 8 billion expected by 2027.
Transaction is EPS accretive by 2027.
UBS remains capitalized well above 13%, ensuring financial stability.
Significant downside protection of CHF 25 billion from the transaction.
Negative
Integration challenges may arise from merging two large financial institutions.
Potential for financial strain during the transition phase.
Creates leading global wealth manager with USD 5 trillion of invested assets across the Group
Extends UBS lead in Swiss home market
UBS strategy unchanged, including focus on growth in Americas and APAC
Attractive financial terms which include downside protection
Annual run-rate of cost reduction of more than USD 8 billion expected by 2027
UBS remains strongly capitalized well above our target of 13% and committed to progressive cash dividend policy
A focused Investment Bank, remaining committed to UBS’s model; strategic Global Banking businesses to be retained, majority of Credit Suisse markets positions moved to non-core
Transaction creates significant sustainable value for UBS shareholders
Ad hoc announcement pursuant to Article 53 of the SIX Exchange Regulation Listing Rules
UBS (NYSE:UBS) (SWX:UBSN) plans to acquire Credit Suisse. The combination is expected to create a business with more than USD 5 trillion in total invested assets and sustainable value opportunities. It will further strengthen UBS’s position as the leading Swiss-based global wealth manager with more than USD 3.4 trillion in invested assets on a combined basis, operating in the most attractive growth markets.
The transaction reinforces UBS’s position as the leading universal bank in Switzerland. The combined businesses will be a leading asset manager in Europe, with invested assets of more than USD 1.5 trillion.
UBS Chairman Colm Kelleher said: “This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. 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.”
UBS Chief Executive Officer 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. The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”
The discussions were initiated jointly by the Swiss Federal Department of Finance, FINMA and the Swiss National Bank and the acquisition has their full support.
Under the terms of the all-share transaction, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to CHF 0.76/share for a total consideration of CHF 3 billion. UBS benefits from CHF 25 billion of downside protection from the transaction to support marks, purchase price adjustments and restructuring costs, and additional 50% downside protection on non-core assets. Both banks have unrestricted access to the Swiss National Bank existing facilities, through which they can obtain liquidity from the SNB in accordance with the guidelines on monetary policy instruments.
The combination of the two businesses is expected to generate annual run-rate of cost reductions of more than USD 8 billion by 2027.
UBS Investment Bank will reinforce its global competitive position with institutional, corporate and wealth management clients through the acceleration of strategic goals in Global Banking while managing down the rest of Credit Suisse’s Investment Bank. The combined investment banking businesses accounts for approximately 25% of Group risk weighted assets.
UBS anticipates that the transaction is EPS accretive by 2027 and the bank remains capitalized well above its target of 13%.
Colm Kelleher will be Chairman and Ralph Hamers will be Group CEO of the combined entity.
The transaction is not subject to shareholder approval. UBS has obtained pre-agreement from FINMA, Swiss National Bank, Swiss Federal Department of Finance and other core regulators on the timely approval of the transaction.
This document contains statements that constitute forward-looking statements. While these statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. Additional information about those factors is set forth in documents furnished and filings made by UBS with the US Securities and Exchange Commission, including the Annual Report on Form 20-F for the year ended 31 December 2022. UBS undertakes no obligation to update the information contained herein.
UBS aims to enhance its global wealth management capabilities by acquiring Credit Suisse, creating a combined entity with over USD 5 trillion in invested assets.
When will UBS see cost reductions post-acquisition?
UBS anticipates annual run-rate cost reductions exceeding USD 8 billion by 2027 as a result of the acquisition.
What financial protections are included in the UBS and Credit Suisse transaction?
The acquisition includes CHF 25 billion of downside protection to mitigate risks associated with the transaction.
Will UBS shareholders need to vote on the Credit Suisse acquisition?
No, the acquisition does not require shareholder approval as UBS has secured pre-agreement from regulators.
How will the acquisition impact UBS's earnings per share?
UBS expects the transaction to be EPS accretive by 2027, enhancing its profitability.
