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The above is excerpted from a current article in The Wall Street Journal, and was edited for brevity.UBS Group AG agreed to take over its longtime rival Credit Suisse Group AG for more than $3 billion, pushed into the biggest banking deal in years by regulators eager to halt a dangerous decline in confidence in the global banking system. The deal between the twin pillars of Swiss finance is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators.
The Swiss government said it would provide more than $9 billion to backstop some losses that UBS may incur by taking over Credit Suisse. The Swiss National Bank also provided more than $100 billion of liquidity to UBS to help facilitate the deal.
Swiss authorities were under pressure to make the deal happen before Asian markets opened for the week. The urgency on the part of regulators was prompted by an increasingly dire outlook at Credit Suisse, according to one of the people familiar with the matter. The bank faced as much as $10 billion in customer outflows a day last week, this person said.
The sudden collapse of Silicon Valley Bank earlier this month prompted investors globally to scour for weak spots in the financial system. Credit Suisse was already first on many lists of troubled institutions, weakened by years of self-inflicted scandals and trading losses. Swiss officials, along with regulators in the U.S., U.K. and European Union, who all oversee parts of the bank, feared it would become insolvent this week if not dealt with, and they were concerned crumbling confidence could spread to other banks.
An end to Credit Suisse’s nearly 167-year run marks one of the most significant moments in the banking world since the last financial crisis. It also represents a new global dimension of damage from a banking storm started with the sudden collapse of Silicon Valley Bank earlier this month.
Unlike Silicon Valley Bank, whose business was concentrated in a single geographic area and industry, Credit Suisse is a global player despite recent efforts to reduce its sprawl and curb riskier activities such as lending to hedge funds.
Credit Suisse had a half-trillion-dollar balance sheet and around 50,000 employees at the end of 2022, including more than 16,000 in Switzerland.
UBS has around 74,000 employees globally. It has a balance sheet roughly twice as large, at $1.1 trillion in total assets. After swallowing Credit Suisse, UBS’s balance sheet will rival Goldman Sachs Group Inc. and Deutsche Bank AG in asset size.
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Comments
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During the hay days, Credit Sussie Bank is the second largest Swiss bank widely held in many mutual funds. It was worth many bullions in asset. Something went terrible wrong in recent years that led to their demise.
"The bank ranks among the world's largest wealth managers and crucially it is one of 30 global systemically important banks, whose failure would cause ripples through the entire financial system."
"Credit Suisse has a local Swiss bank, wealth management, investment banking and asset management operations. It has just over 50,000 employees and 1.3 trillion Swiss francs in assets under management at the end of 2022, down from 1.6 trillion a year earlier."
"With more than 150 offices in around 50 countries, Credit Suisse is the private bank for a large number of entrepreneurs, rich and ultra rich individuals and companies."
Link
https://ubs.com/us/en/asset-management/individual-investors-and-financial-advisors/products/mutual-fund.html
Credit Suisse offers a suite of Exchange Traded Notes (ETNs).
Link
"An ETN is an unsecured debt security issued by a bank, unlike an ETF which holds assets such as stocks, commodities, or currencies which are the basis of the price of the ETF.
The return of an ETN is linked to a market index or other benchmark."
"An ETN promises to pay at maturity, the full value of the index, minus the management fee.
Like any other debt security, the investor is subject to the credit risk of the bank issuer."
Link
ING insurance and asset management businesses (US) went to Yoya Financial/VOYA.
ING Direct (US online bank, that itself had origin in the failed online NetBank in GA) went to Capital One/COF. Unluckily or luckily, I stayed through all these transitions after my early find years ago that NetBank offered FREE wire transfers - that didn't last long!
We don't know all details of the UBS takeover of CS, but there may be similar conditions by the government or by UBS. CS in the US already had a lot of controversial M&A history - First Boston, Warburg Pincus (asset management unit), Donaldson Lufkin Jenerette.
https://en.wikipedia.org/wiki/Credit_Suisse