UBS (UBSG.S) is set to finalize its acquisition of Credit Suisse (CSGN.S) and expects the process to be completed by June 12, creating a massive Swiss bank with a balance sheet worth $1.6 trillion.
The takeover follows a government-supported rescue earlier this year.
UBS stated that the completion of the deal is contingent upon the registration statement, which includes the shares to be delivered, being declared effective by the U.S. Securities and Exchange Commission, along with other closing conditions.
UBS shares showed a 1.1% increase in premarket activity in Switzerland, while Credit Suisse shares rose by 0.7%.
Analyst Michael Klien from Zuercher Kantonalbank viewed the completion of the takeover as a crucial step in initiating a long integration process and expressed optimism about the openings for investors, despite the noteworthy alteration in UBS’s risk profile.
The agreement between Switzerland’s leading bank and its smaller rival was reached on March 19.
UBS agreed to pay 3 billion Swiss francs ($3.37 billion) and assume up to 5 billion francs in losses to prevent the collapse of Credit Suisse, which was facing a crisis of customer confidence.
The Swiss authorities intervened to avert a broader banking crisis. While the completion of the deal was initially expected by late May or early June, discussions with Swiss authorities regarding loss protections and capital requirements required more time.
Following the completion of the transaction, the shares of Credit Suisse and American Depositary Shares (ADS) will no longer be listed on the SIX Swiss Exchange (SIX) and the New York Stock Exchange (NYSE).
SIX has indicated that the delisting of Credit Suisse shares may occur as soon as June 13. As part of the all-share takeover, shareholders of Credit Suisse will be granted one UBS share for every 22.48 shares they currently hold.
The merger will establish a group overseeing $5 trillion of assets, positioning UBS as a leading player in key markets without the need for years of organic growth.
The combined entity will employ 120,000 individuals globally, although UBS has already announced plans to reduce costs and take advantage of synergies through job cuts.
UBS had been working diligently to expedite the transaction, aiming to provide certainty to Credit Suisse clients and employees and prevent further departures.
The deal received support from the Swiss central bank, which provided 200 billion francs in liquidity support, and the government, which committed to absorbing up to 9 billion francs in losses in accumulation to those abided by UBS.
UBS CEO Sergio Ermotti emphasized that the transaction was an acquisition rather than a merger, and he warned of forthcoming “painful” decisions.
The complexity arising from the takeover has reportedly led Switzerland’s largest lender to consider postponing its quarterly results until the end of August, although the bank declined to comment on this potential delay.
There is still uncertainty surrounding the fate of Credit Suisse’s Swiss retail bank, often regarded as the group’s “crown jewel.”
Integrating it into UBS could result in significant cost savings, but concerns have been raised about the size of the combined entity and the potential for job cuts.
Ermotti stated that the bank is still evaluating the situation, but the “base scenario” remains full integration with UBS, and he emphasized that he would not be swayed by nostalgia in making decisions regarding the way forward.
Despite the challenges ahead, Ermotti expressed optimism and dismissed concerns about the new bank being too large for Switzerland.
He believed that the acquisition would be a great success story for shareholders, employees, clients, and the financial services industry in Switzerland.
This deal would remain a historic move considering the power both these groups held individually and together, soon.