Takeover of Credit Suisse by UBS


A week ago Friday, the fall of Silicon Valley Bank caused turmoil in the US banking sector. In the course of last week, these distortions spilled over to European banks. Globally, there were significant losses on bank stocks last week. Credit Suisse was already in distress before these upheavals as a result of various crises (including Archegos, Greensill) and a loss of CHF 7.3 bn in 2022 as well as negative publicity. The loss of trust by clients was further accentuated by the events in the banking sector. The SNB provided Credit Suisse with additional liquidity on Thursday to prevent a bank run.

Initial talks with UBS regarding a possible takeover had already taken place on Wednesday. Over the weekend, these talks between the Federal Council, FINMA, UBS, CS and the SNB became more concrete. The takeover of CS by UBS was communicated on Sunday evening 19. March 2023.


The takeover is structured as a share deal and will see Credit Suisse shareholders receiving one UBS share for every 22.48 CS shares held. The transaction is valued at CHF 3 billion. It is expected that the transaction will be completed by the end of 2023 (possibly already in the coming months).

Credit Suisse’s subordinated AT1 bonds amounting to around CHF 16 billion are written off in full due to the extraordinary government support.

As an emergency decree by the Federal Council is applied for, the transaction is not dependent on the approval of shareholders. The primary objective of the transaction is financial market stability. To this end (confidence-building measure), the transaction is furthermore not dependent on the approval of the Competition Commission (WEKO), but only on the approval of FINMA.

The takeover will result in an even larger bank. The current regulation calls for higher capital requirements which must be built up by the end of a transitional period. Regarding the CS employees, no information was given on Sunday.

How do the federal government and the SNB support this transaction?

In order to ensure a quick settlement of the takeover, the Swiss Confederation is granting loss guarantees to the tune of CHF 9 billion for UBS in order to reduce any risks (only applicable for losses exceeding CHF 5 billion, which are related to a specific portfolio of the Credit Suisse Investment Bank). This is intended to take account of the fact that only a brief due diligence could be carried out.

In addition, the two banks can obtain additional liquidity assistance loans totalling up to CHF 100 billion from the SNB if necessary. This includes Emergency Liquidity Assistance ELA 1 – (against collateral – e.g. mortgages) and ELA 2 (no collateral – bankruptcy privilege).

Furthermore, and based on the Emergency Ordinance of the Federal Council, the SNB is authorised to grant CS a liquidity assistance loan of up to CHF 100 billion which is guaranteed by the Swiss Confederation and is structured in accordance with the public liquidity backstop.

The liquidity facilities and guarantees are intended to bridge the transitional period until the transaction is completed.

The measures taken by the Confederation or the SNB are based on Art. 184 and Art. 185 of the Federal Constitution (emergency law).


The business activities of CS are being maintained for the time being. All business activities of the banks may continue without restrictions. Obligations and contracts will be transferred to UBS in the future.

  • Accounts: Access to deposits is ensured.
  • Deposits: Access to custody accounts is ensured.
  • Asset Management: The asset management activities are being continued. No information is yet available on how asset management might be integrated into UBS or which parts might be spun off. The collective investments/funds represent special assets. Special assets and the fund management can be transferred to a new company if necessary.
  • Derivatives: Are currently being continued. It is advisable to diversify the counterparties going forward.
  • Shares/equity: The CS shares are exchanged for UBS shares at a ratio of 22.48 to 1. This corresponds to a significant price loss. The purchase price is CHF 0.76 per share (last price on Friday was CHF 1.86). This would correspond to a loss of about 60% compared to last Friday’s closing price. In the SPI, the index weighting of CS was about 0.5% as of last week.
  • Bonds: The debt is taken over by UBS. In the SBI, the index weight of the CS as of last week was around 0.5%-0.6%. In the Bloomberg Global Aggregate, the index weight was less than 0.1%. The subordinated AT-1 bonds are a distinct exception. They are written off. These bonds are not part of the SBI index.


Concluding remarks

An important step was taken with the transaction to restore confidence in the Swiss financial centre. Many questions remain, and the situation continues to evolve dynamically. Detailed information will only be disclosed by the parties involved in the coming weeks and months.

It should also be noted that global investors are unsettled by the rapid development or events of the last weekend, which may lead to additional market volatility in the coming weeks.

This case shows once again that sound diversification is necessary also in banking.

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