Quotable: UBS buys Credit Suisse in “an emergency rescue”

“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.” —UBS Chairman Colm Kelleher


One big number: Credit Suisse’s biggest loser

$1 billion: How much the value of Credit Suisse’s top shareholder Saudi National Bank’s investment has plummeted in the last few months. The Riyadh-based bank, born out of the April 2021 merger of National Commercial Bank and Samba Financial Group, told CNBC it suffered an 80% loss on its investment.


What will happen to Credit Suisse employees?

While Credit Suisse’s statement said UBS intends to continue employment of Credit Suisse staff, UBS chief Kelleher’s statement at a news conference inspired less confidence. He said it was “too early” to address job cuts. “We need to do this in a rational way [and] thoughtfully, when we’ve sat down and analyzed what we need to do,” he said.


As the two banks play in the same field, there will be overlap in talent once they merge. To save money and streamline the resultant company, experts expect layoffs. “The firm initiating the takeover will drive the process and lean toward saving their employees—to the detriment of those who work for the acquired company,” Jack Kelly, founder and chief executive of search firm WeCruiter, wrote in Forbes.

One more thing: Lessons from JPMorgan buying Bear Stearns in 2008

During the 2008 global financial crisis, when Bank of America acquired Merrill Lynch—the brand it fully phased out a decade on—another deal was brokered by the government to rescue an ailing institution. Washington asked JPMorgan to absorb the collapsing Bear Stearns investment bank.


However, even at a bargain price, buying the “house on fire” wasn’t worth it, chief Jamie Dimon has admitted on a number of occasions. Among other things, JPMorgan was burdened by a lawsuit alleging that Bear Stearns deceived investors buying mortgage-backed securities in 2006 and 2007—before the big bank bought it. JPMorgan would not partake in a similar bailout now. Ironically, JPMorgan analysts suggested UBS should buy Credit Suisse just last week.

It’s no wonder then that UBS is a reluctant buyer. Chairman Kelleher, who had a front-row seat to the JP Morgan-Bear Stearns deal as chief financial officer of Morgan Stanley back then, has made clear that UBS did not initiate discussions to buy the 167-year-old bank that has been marred by a plethora of controversies in the last few years, including spying, corruption, and management shake-ups, which has led to even major shareholders dissolving the entirety of their double-digit shareholding.


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