19 questions and answers on the results of March 19, 2023: What happens if UBS stumbles?

Because customers and shareholders had lost confidence and were withdrawing money from the bank on an unprecedented scale. In some cases, over 10 billion francs flowed per day for weeks. The bank did not have a working business model. The share price fell when the largest shareholder announced on Wednesday that it would no longer pump any more money into struggling CS before the collapse. The fate of the bank was sealed.

Toxic risk culture in CS. The bank survived the financial crisis unscathed and subsequently acted less cautiously than other banks. A series of presidents and CEOs, including Urs Rohner (64), Brady Dougan (64) and Tidjane Thiam (61), have failed to rein in this culture. The result: Billion-dollar fines and scandals cost the bank dearly, while bonuses to senior management continued to increase.

A mix of responsibility and business acumen. CS’s business wasn’t doing so badly, especially in Switzerland, so UBS was able to take over some of its rivals’ jewels for just three billion francs. The aim was to prevent a global financial crisis that would also affect UBS. To contain the risks, UBS agreed to a $9 billion guarantee, which it later waived.

Because the “too big to fail” regulation was never implemented. After all, no one had the courage to liquidate a major global bank in an orderly manner during the CS crisis. Those in charge avoided testing how markets and other countries would react to isolating the Swiss business from other parts of the troubled bank.

Then Switzerland has a big problem; There is no other big bank that can come to the rescue. Only the state would remain. Therefore, regulations now need to be tightened, Finma must be strengthened and the decision of a major global bank must be reliably implemented at the global level.

The end of Credit Suisse

Extraordinary task for Finma

This is how the financial regulator monitors a superbank like UBS

Keller-Sutter saves CS

“There were pizza boxes everywhere.”

Economics professor continues

“Finma needs new instruments”

After CS drop

German banks now want to attack Switzerland

Not before the end of 2024. To draw the correct conclusions from the collapse of the CS, the whole of Switzerland is waiting for the report of the parliamentary commission of inquiry (PUB). PUK has already held 15 meetings and interviewed numerous representatives of the CS crisis. In April, the Ministry of Finance also plans to publish a report on the “too big to fail” regulation.

The day after the takeover, UBS’s share price initially fell sharply, but recovered the same day. Since then, the value of UBS shares has increased by more than 60 percent.

UBS is making rapid progress on integration. The first phase of strategic plans and stabilization of patient CS has been completed. UBS had cut costs by almost 4 billion francs by the end of the year. The next milestone is the merger of UBS AG and Credit Suisse AG. This should happen in the middle of the year.

The CS brand will disappear in the long run. However, currently the sailboat CS logo still appears in branches, on letterheads and customer cards, and is increasingly supported by the suffix “Part of the UBS Group”. The CS logo will gradually disappear from daily Swiss life at the earliest after the merger of two Swiss organizations.

UBS has 190 branches and CS 95 branches in many locations in the immediate area. This means a lot of branches will close, but it doesn’t necessarily mean CS branches will close. About 100 branches are likely to disappear.

The building at Paradeplatz 8 in Zurich continues to be owned by UBS. The bank is planning a financial campus in the heart of the city, with the former CS headquarters as a central element.

There is nothing right now. You will keep your CS bank information for now. Migration of accounts to the UBS banking system could begin in mid-2025; This is a complex process that is unlikely to be completed until next year.

UBS took over all sponsorship obligations of CS, including the Super League contract, until the end of 2025. It is unclear what will happen next; Renewal is not mandatory. At the end of last year, UBS had only extended its contract with the Swiss national football team until at least 2028.

In principle, Switzerland has sufficient alternatives to UBS with Raiffeisen and cantonal banks and other financial institutions. But CS was particularly strong in its corporate client business. Many companies do not want to rely solely on UBS for more complex transactions or allow it to set terms and conditions and are also looking at foreign banks as an alternative. A report of the Competition Commission is available at Finma but is not publicly available.

The bank is silent on this issue. UBS alone put the figure at 3,000 jobs that would be lost as a result of the integration. But it is clear that layoffs have already occurred, with some leaving the bank voluntarily or retiring early.

Moody. It is heard that the weather is dead and the momentum of the first few months is lost. For former CS employees, it’s about establishing themselves within the bank and taking on interesting roles. Apparently elbows are also used. Middle management is at risk of being overloaded because managers must deal with the integration of new employees in addition to their regular work.

Fear: UBS is no longer too big to fail. But “It’s too big to get rid of.” Even by an imprecise measure, UBS’s total assets are more than twice the economic output of Switzerland. No other European country, except Finland, can afford such a large bank.

NO. At least from the perspective of private clients and many corporate clients, this can work without a big bank. There are also enough other financial institutions in Switzerland. The situation is slightly different for larger, export-oriented corporate clients who rely on a major bank’s global network. At the same time, the question arises of how attractive the financial center would still be if it were not for a bank of global importance.

Sergio Ermotti (63) wants to more or less complete his CS integration before leaving. This will not happen until the end of 2026 at the earliest, but it is quite possible that this will take a little longer. What is important now is that Ermotti managed to create internal successors who know the bank and help shape the entire integration process.