Swiss banking giant UBS agreed to buy troubled rival Credit Suisse for 3 billion Swiss francs or about $3.24 billion.
The move comes after the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority FINMA asked both companies to conclude the transaction to restore necessary confidence in the stability of the Swiss economy and banking system, Credit Suisse said in a statement on Sunday.
Under the terms of the all-share transaction, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to 0.76 francs per share for a total consideration of 3 billion francs.
As of on 17th March 2023, Credit Suisse has market cap of $8.55 Billion.
The merger is expected to be completed by end of 2023. UBS expects that the merger will generate annual run-rate of cost reductions of more than $8 billion by 2027.
UBS has expressed its confidence that the employment of the staff of Credit Suisse will be continued.
UBS anticipates that the transaction is earnings per share accretive by 2027 and the bank remains capitalized well above its target of 13%.
UBS Chairman Colm Kelleher will be Chairman of the combined entity and UBS Chief Executive Officer Ralph Hamers will be Group CEO of the merged entity.
The transaction is not subject to shareholder approval. UBS has obtained pre-agreement from FINMA, Swiss National Bank, Swiss Federal Department of Finance and other core regulators on the timely approval of the transaction.
Credit Suisse last week said it would borrow up to 50 billion Swiss Francs or around $53.7 billion from the Swiss National Bank after the Swiss banking major lost much of its value in the wake of latest banking industry turmoil. The development came as its largest investor Saudi National Bank said that it could not provide the Swiss bank with more financial assistance.
Since 10th March, the global banking industry has been facing scrutiny following the failure of U.S banks Silicon Valley Bank and Signature Bank, deemed as the biggest U.S. banking failures since the 2008 financial crisis.
Source: Read Full Article