After a brief three-month period, UBS Group AG has effectively overseen the establishment of two distinct parent companies: UBS AG and Credit Suisse AG. Each institution will retain its own subsidiaries, branches, client base, and counterparties. The combined entity will be managed by the board of directors and executive committee of UBS Group AG.

The merger marks a historic union between two globally systemically significant financial institutions. UBS forecasts that its Common Equity Tier 1 (CET1) capital ratio will stabilize at around 14% in the second quarter of 2023 and maintain this level throughout the year. It anticipates cost savings from risk-weighted asset reductions to offset Credit Suisse’s operational losses and significant restructuring costs.

Details on the Acquisition

The USD 3.2 billion acquisition concluded over a weekend in March, amid concerns that major losses at Credit Suisse could jeopardize the stability of the financial sector. The Swiss authorities subsequently agreed to absorb up to USD 10 billion in potential future losses, subject to UBS committing to cover the first 5 billion Swiss francs.

The deal’s terms include a cap on 11 financial risks and 12 non-financial hazards. While many of these pertain to operational management, such as research allocation and facility utilization, others directly affect Credit Suisse’s ongoing operations.

Regulations Post-Acquisition

Credit Suisse bankers now face strict restrictions on trading various obscure financial instruments, including Korean futures and options related to specific quantitative indexes. In 2006, the bank incurred a loss of USD 120 million from trading in Korean futures, leading to significant restructuring within the unit.

Following an incident involving loans to sanctioned oligarchs, Credit Suisse advised hedge funds and other investors to delete records associated with its wealthiest clients’ yachts and private aircraft. This event highlighted ongoing challenges at the bank as it integrates into UBS.