UBS’s takeover of Credit score Suisse entails “an enormous quantity of danger”, the financial institution’s chair Colm Kelleher warned on Wednesday, as shareholders lined as much as specific issues over the landmark deal — agreed only a fortnight earlier with out their consent.
Talking at UBS’s annual basic assembly in Basel, Kelleher stated the acquisition of UBS’s largest rival was a “milestone” in international finance that may speed up the financial institution’s present technique — with progress targeted within the US and Asia — however cautioned that “this isn’t in any method a straightforward deal to do”.
“You can not simply put numbers collectively and attain a sum — it’s a must to perceive there’s a enormous quantity of danger in integrating these companies,” he stated.
Swiss authorities triggered UBS’s acquisition of Credit score Suisse roughly two weeks in the past, in a $3.25bn emergency takeover cobbled collectively over the course of a weekend, to attempt to avert a probably catastrophic banking collapse.
“We made a selection on behalf of Switzerland, UBS’s place in Switzerland, and on what was finest for the worldwide monetary system,” stated Kelleher.
“This can be a Herculean job,” stated Lukas Gähwiler, UBS vice-chair. “We had solely 48 hours to conduct our due diligence, so many questions thus stay unanswered . . . Nice uncertainty will stay.
“I can perceive why individuals are bewildered, even offended,” he added.
The transaction will catapult UBS into place because the fourth-largest lender worldwide, with $5tn in belongings beneath administration, and ensure its place because the financial institution of selection for the world’s super-rich. However it’s going to take years to perform and can come beneath important political and regulatory scrutiny.
“We’re involved about this new big financial institution,” stated Vincent Kaufmann, chief government of the Ethos basis, a bunch representing greater than 3 per cent of UBS’s shares on the AGM. “There’s a enormous focus of danger within the Swiss market,” he identified, noting that fifty per cent of all mortgages within the metropolis of Geneva will probably be held by the financial institution.
In taking up Credit score Suisse, UBS was “taking up Credit score Suisse’s dangers . . . which we’ve got warned about for years,” stated Nicolas Götschmann of one other giant shareholder proxy advisor Actares. He requested for assurances that UBS would transfer swiftly to cut back dangerous funding banking actions.
UBS shareholders met only a day after Credit score Suisse’s AGM in Zurich — the final within the financial institution’s 167-year historical past.
Executives there struck a extra sombre tone. Chair Axel Lehmann stated he was “actually sorry” that occasions had introduced the financial institution to the top of its unbiased existence.
After greater than two years of successive scandals, a weakened Credit score Suisse fell sufferer to the sudden international liquidity shock that hit the monetary system following the failure of Silicon Valley Financial institution within the US.
“The bitterness, anger and shock of all those that are disenchanted, overwhelmed and affected by the developments of the previous few weeks is palpable,” Lehmann stated.
Some Credit score Suisse shareholders — whose shares will probably be transformed into UBS shares at a ratio of twenty-two.48:1 — additionally turned up in Basel.
The value paid was “a cheek”, stated Urs Stüdi, who lambasted Credit score Suisse’s board for having wrecked the financial institution and compelled it into UBS’s arms.
Martin Kaufmann, of Meilen on lake Zurich, stated he had “by no means wished to be a UBS shareholder”, however awoke on a Monday morning final month and found that he could be. “I wish to encourage everybody to purchase UBS shares,” he stated, earlier than launching right into a criticism of the derisory method Credit score Suisse had been handled within the negotiations to put it aside.
Swiss shareholders of each banks repeatedly criticised remuneration practices and risk-taking.
“We have to study the teachings from the Credit score Suisse catastrophe,” stated Martin Schütz, who inherited UBS shares from his mom. “We have to transform the tradition of bonuses . . . in any other case we will probably be waking up in the future with UBS having gone down the drain as properly.”
