UBS Credit Suisse deal creates $1.5 trillion AM business

The move by UBS to buy rival Credit Suisse is set to create one of the largest asset managers in Europe.

The business’s combined asset management unit will oversee $1.5 trillion in assets under management (AUM) and create a global wealth management business with more than $3.4 trillion (€3.18 trillion) in AUM, UBS said.

The $3.25 billion deal follows attempts by the Swiss regulators to calm the heightened nervousness in markets that had hit Credit Suisse after banking rescues in the US.

The prospect of job losses at Credit Suisse as a result of the UBS deal, including within asset management, is being raised by commentators, given UBS said it planned to reduce annual costs by $8 billion by 2027.

The Swiss central bank provided a 50 billion Swiss franc (€50 billion) lifeline last week after Credit Suisse’s shares dropped, leading to a 33% fall in the past month.

The hit to the bank’s shares came after Silicon Valley Bank in the US had to be rescued by authorities, with lawmakers agreeing to guarantee all deposits, even above the $250,000 limit provided by the Federal Deposit Insurance Corporation.

Colm Kelleher, chairman at UBS, emphasised the intense nature of the deal. “This acquisition is attractive for UBS shareholders, but let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue,” he said.

“We have structured a transaction which will preserve the value left in the business while limiting our downside exposure.”

The acquisition has received the backing of the Swiss Federal Department of Finance, Swiss supervisory authority FINMA and the Swiss National Bank.

The enlarged asset management division faces a challenging environment after recent data showed that the Swiss fund market shrank by nearly 14% in 2022. The country’s Asset Management Association labelled it “the most difficult investment year since 2008”, while the data also showed that Swisscanto, BlackRock and Pictet each gained market share at the expense of UBS and Credit Suisse.

© 2023 funds europe

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