UBS’s takeover of Credit score Suisse entails “an enormous quantity of threat”, 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 common assembly in Basel, Kelleher mentioned the acquisition of UBS’s largest rival was a “milestone” in world finance that will speed up the financial institution’s present technique — with progress targeted within the US and Asia — however cautioned that “this isn’t in any approach a simple deal to do”.
“You can not simply put numbers collectively and attain a sum — you must perceive there’s a large quantity of threat in integrating these companies,” he mentioned.
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 greatest for the worldwide monetary system,” mentioned Kelleher.
“This can be a Herculean process,” mentioned 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 indignant,” he added.
The transaction will catapult UBS into place because the fourth-largest lender worldwide, with $5tn in property beneath administration, and make sure its place because the financial institution of selection for the world’s super-rich. However it’ll take years to perform and can come beneath important political and regulatory scrutiny.
“We’re involved about this new large financial institution,” mentioned Vincent Kaufmann, chief government of the Ethos basis, a gaggle representing greater than 3 per cent of UBS’s shares on the AGM. “There’s a large focus of threat within the Swiss market,” he identified, noting that fifty per cent of all mortgages within the metropolis of Geneva shall be held by the financial institution.
In taking on Credit score Suisse, UBS was “taking on Credit score Suisse’s dangers . . . which we’ve got warned about for years,” mentioned Nicolas Götschmann of one other massive shareholder proxy advisor Actares. He requested for assurances that UBS would transfer swiftly to reduce 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 mentioned he was “really 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 world 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 mentioned.
Some Credit score Suisse shareholders — whose shares shall be transformed into UBS shares at a ratio of twenty-two.48:1 — additionally turned up in Basel.
The value paid was “a cheek”, mentioned 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, mentioned he had “by no means needed to be a UBS shareholder”, however awoke on a Monday morning final month and found that he can be. “I want to encourage everybody to purchase UBS shares,” he mentioned, earlier than launching right into a criticism of the derisory approach Credit score Suisse had been handled within the negotiations to reserve it.
Swiss shareholders of each banks repeatedly criticised remuneration practices and risk-taking.
“We have to study the teachings from the Credit score Suisse catastrophe,” mentioned Martin Schütz, who inherited UBS shares from his mom. “We have to transform the tradition of bonuses . . . in any other case we shall be waking up sooner or later with UBS having gone down the drain as nicely.”
