UBS wants to complete CS takeover fast

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A major issue for UBS is uncertainty among CS employees. Until the takeover is complete, it’s in the dark whether they’ll even own a business later on. UBS employees are also coming under pressure with the takeover of the arch-rival. Only because the return of Sergio Ermotti (62) as CEO will likely lead to changes in management.

It is clear today that thousands of jobs are at risk. It is estimated that 20 to 30 percent of positions will be cut. By the end of 2022, both banks had employed a total of 123,000 full-time equivalents.

In this case, there is a risk that many CS employees will leave the bank before that date. And competitors are likely to feel their chance to miss out on good staff.

Customers keep withdrawing money

However, not only employees but also customers are avoiding CS. It is true that the strong outflow of funds seen before the takeover was announced on March 19 should have stopped. But: “More outlets can be expected even after the takeover is announced,” Vontobel analyst Andreas Venditti said in an interview with the AWP news agency. On the one hand, there must be overlaps in terms of business and customer. “For diversification reasons, customers will not wait until they become UBS customers, they will move some of their assets.”

Additionally, CS has a greater risk appetite for transactions and customers than UBS. “UBS probably doesn’t want to take over every customer from Credit Suisse that way.” Large customers are aware of this and are already looking for alternatives in the market.

RBC analyst Anke Reingen writes that given the many uncertainties, it makes sense for UBS to step up and aim to shut down as soon as possible. “You can see the urgency: UBS wants to get this done as quickly as possible,” She venditti says. However, how quickly the deal will be completed depends on when regulators approve it.

I partially agree

UBS management spoke while announcing the purchase of 58 countries in total. In principle, the approval may have been obtained when the takeover plans from very important countries such as the USA were completed. Official processes take longer but need to be expedited as promised by the bank.

The global bank is currently working abroad to obtain all necessary regulatory approvals. The Bank of England gave its approval in early April, Reuters news agency reported. The EU Commission also announced that the deal could be completed due to an exception, although the official review has not yet been completed.

Just last Friday evening, the US Federal Reserve announced that it has approved UBS’s acquisition of CS subsidiaries in the US. The takeover is imminent, but must be signed and sealed by the end of June at the latest.

Parliament’s ‘no’ is being legally investigated

Meanwhile, the Swiss competition authority has nothing to report: where financial stability is at stake, financial market regulator Finma can approve the merger without being reviewed by the Competition Commission (Comco). There are also no other requirements for UBS from the federal government, but instead billions of dollars in government assistance in case of any loss.

That’s why it’s hard to imagine the takeover deal failing at the last moment, says Vontobel’s Venditti. Many of the hurdles that would normally have to be overcome when incorporating a company have already been removed. Shareholders of both UBS and CS were also not allowed to have a say.

However, there could still be consequences when the National Council said no to the federal government’s billion-euro guarantees in an extraordinary session last week. (SDA/kae)

Source :Blick