2023-04-26 00:20:28
Swiss banking giant UBS announced on Tuesday that it hopes to complete the acquisition of its rival Credit Suisse at the end of June, stressing that this merger represents “a unique opportunity to create value.”
Switzerland’s largest bank reported a net profit of $1 billion, well below expectations of $1.7 billion, but reported “significant capital inflows” over the same period, indicating customer confidence, according to the quarterly results statement.
The bank’s new managing director Sergio Ermotti, returning to the position he previously held to lead the acquisition of Credit Suisse, confirmed that he was “convinced that this transaction will contribute to strengthening the leading position of the Swiss financial center and will benefit the whole economy,” a statement read.
On March 19, UBS agreed to buy its competitor Credit Suisse, under pressure from the authorities, in a deal amounting to 3 billion Swiss francs (3.02 billion euros), with financial guarantees from the federal government and the central bank.
The deal saved Switzerland’s second-largest bank from bankruptcy, which would have caused “irreparable economic damage”, and “therefore, Switzerland must carry out its responsibilities beyond its borders”, as Swiss Finance Minister Karin Keller-Sutter warned.
The banking sector has been under great pressure since major central banks raised interest rates in an effort to control inflation. Many institutions failed to prepare for the current risks, following years of benefiting from low-interest financing.
The bankruptcy of the “Silicon Valley” bank in the United States and other regional US banks exacerbated the fears of investors, prompting them to sell the bonds of banks that are considered weak links.
Credit Suisse went through two years with a number of scandals, which exposed “fundamental weaknesses…in internal control”, according to management’s own admission.
Despite his management’s efforts to promote a 3-year restructuring plan, it has not been successful.
France 24/AFP
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