UBS to buy Credit Suisse
Swiss investment bank UBS announced on the 19th that it had agreed to acquire Credit Suisse for approximately ¥420 billion (approximately $3.23 billion).
The acquisition will take the form of a stock exchange and is planned to be completed by the end of 2023. As of March 17, the market value of Credit Suisse was estimated to be approximately 1 trillion yen (approximately $8 billion), but this figure is well below that figure.
The Swiss Federal Ministry of Finance, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (central bank) also cooperated in the transaction. The Swiss National Bank will provide liquidity assistance to UBS of approximately ¥14 trillion (CHF100 billion) and the Swiss government will provide approximately ¥1.3 trillion (CHF9 billion) to UBS for potential losses it may suffer from the acquisition. Guarantee.
UBS said the acquisition of Credit Suisse would create one of the world’s leading asset management companies with approximately 660 trillion yen ($5 trillion) in investment assets across the group. He also said he expects to save more than about 1 trillion yen ($8 billion) annually by 2027.
UBS Chairman Colm Kelleher said: “While this acquisition is attractive to UBS shareholders, we would like to make it clear that for Credit Suisse this is an urgent relief.” He added that he traded on terms that would limit the risk of asset declines and preserve the residual value of the business.
The Swiss Financial Market Supervisory Authority (FINMA) has said ¥2.3 trillion (CHF16 billion) worth of Credit Suisse bonds will be worthless, with the cost borne by private investors.
The Swiss government is also reportedly considering full or partial nationalization of the bank if UBS’s takeover of Credit Suisse fails.
Credit Suisse announced a business reconstruction plan in October 2022 after recording a huge loss in the transaction of Arquegos Capital Management in the United States, but the stock price has been sluggish since then.
connection: In response to Credit Suisse’s management instability, the Swiss central bank issued an emergency statement
Cryptocurrency companies looking for partners outside the US
In response to recent financial instability, US crypto asset (virtual currency) companies are reportedly contacting Swiss banks to find new partners.
In the background, banks that provided services to the cryptocurrency industry such as Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank in the United States failed one after another.
Yves Longchamp, head of operations at SEBA Bank in Switzerland, said that access to the bank’s website has increased from the United States, and inquiries from American companies have also increased at offices in Singapore, Hong Kong, and Abu Dhabi in the United Arab Emirates (UAE). explained that Some companies have already started the contract process.
Rani Jabban, head of finance at Swiss Arab Bank, also said that the company has seen an increase in prospects from industries such as cryptocurrency venture capital since March, with 80% of them being former Silvergate clients.
In February, the US Federal Reserve (Fed), US Federal Deposit Insurance Corporation (FDIC) and US Office of the Comptroller of the Currency (OCC) jointly issued a warning about the risks cryptocurrencies pose to banks.
While stating that it “does not discourage us from providing services to any particular type of company,” including the crypto industry, we will continue to support deposits of cryptocurrency companies, especially those for their users, as well as for stablecoin reserves. He pointed out that deposits are subject to liquidity risk. Appropriate risk management is required.
Barney Frank, director of Signature Bank, believes the regulators shut down the bank in part to send a warning message that cryptocurrencies are dangerous and should be avoided.
In the United States, public hearings will soon be held to find out what caused the failure of Silicon Valley Bank and Signature Bank. Silicon Valley Bank filed for bankruptcy on June 17 at Chapter Eleven.
connection: SVB Group, bankruptcy filing to hold public hearing to find out the truth
Chapter 11 of the U.S. Bankruptcy Code (Chapter 11)
A reconstruction-type bankruptcy legal system similar to the Civil Rehabilitation Law of Japan. The company will be restructured by reducing debts while continuing to operate. Debt collection will be suspended after the application, and the debtor will work on debt consolidation and formulate a reconstruction plan within 120 days in principle.