by Mark Worth
The Swiss National Bank announced on 19 March that UBS would acquire Credit Suisse in an all-shares transaction valued at CHF 3 billion (€3.04 billion). UBS executives held a call with journalists and analysts to share details and discuss implications of the deal on 29 March. Here are excerpts of comments by UBS Board Chair Colm Kelleher.
“The only way to stabilize the situation nine days ago was the full acquisition of Credit Suisse as a signal to the market that all of that was safe and there was no discussion about the future there. I cannot reemphasize how big this deal is in terms of financial history and financial engineering that’s required. The priority is to get a successful integration of what is a single and huge deal.
It’s really important that we get the support of all regulators globally as soon as possible to close this transaction so that we can actually make this analysis and then on the back of that come out with our plans. And we have promised to all of our stakeholders including our staff but also to Credit Suisse future colleagues when we have the plans and we can be transparent, we will be transparent.
In a nutshell, investors, our shareholders by and large, see significant upside in this transaction, but they are very concerned about execution risk and we have a lot of execution risk here. So this is not in any way an easy deal to do. And that is why we are where we are today. An execution risk is what people do not understand. You can’t just put numbers together and reach a sum. You have to understand there is a huge amount of risk in integrating these businesses.
Our #1 priority is stabilizing the situation. This is a risky integration. We need to stabilize once we then taken stock of all the risks, all the possible permutations and we need our new CEO to look at that afresh, at that stage, then we will have a sense. Our intention is to disclose the market as much as we can when we can, but stabilization first.
There are cultural issues between Credit Suisse and UBS. We do not want to import a bad culture into UBS. We are going to downsize as quick as we can the non-core units and ancillary businesses at Credit Suisse. We’ve got two storied franchises coming together, a lot of pride, a lot of people who are worried. We have to tread this delicately. We have to pick the right people and it will take us time, but we will be very sensitive. And it’s one of the reasons why we’ve appointed [Designated CEO] Sergio [Ermotti]. He is well known to both banks. He is well known globally.
I know that this has been a flurry of news over the past two weeks, and hopefully what we’re doing is the right thing. And I think we’ve got the right team assembled. We need to explain our story to all our stakeholders and explain why this is a great deal, if it’s executed properly, but it comes with risk. And there are numerous stakeholders who need to be placated on this. So, we will continue to disclose more information as this deal is executed better.
We’re going to be very sensitive to all these constituencies. Each is as important to us as every single one is an important stakeholder. So, I can only say this, wait and see how we’re progressing.”
