When a bank run started at Credit Suisse in mid-March 2023, UBS already had a secret plan for a potential takeover of its competitor, according to Bloomberg.
When UBS chairman Colm Kelleher joined UBS in 2022 he inherited a plan put together by the bank’s former chairman as early as 2020 on how Credit Suisse could be taken over. Kelleher built on the plan with help from a small group of bankers from Morgan Stanley, his former employer.
According to Bloomberg the project was top secret and few at Morgan Stanley knew what their senior mergers and financial services colleagues were working on with a tight circle of UBS executives. But their efforts meant that when Credit Suisse depositors started rushing to withdraw their money in mid-March, UBS was ready to go.
On 15 March 2023, when the Swiss National Bank (SNB) provided Credit Suisse with a CHF 50 billion lifeline and the Swiss government (Federal Council) encouraged the two banks to merge, UBS quickly turned from planning to execution.
By the end of the following weekend, CHF 16 billion of Additional Tier 1 (AT1) bonds had been written to zero and UBS had acquired a company with a book value of CHF 61 billion1 for CHF 3 billion. The deal left Credit Suisse shareholders with around 5 cents for every franc of book value.
On 4 April 2023, the management of Credit Suisse faced angry shareholders at the company’s annual general meeting. Credit Suisse chairman Axel Lehmann’s apology for the bank’s rapid demise and fire sale proved sufficient for him to remain in the job by a thin margin – 55.67% of votes supported his remaining, reported RTS.
1Total shareholders’ equity at 31 December 2022 of CHF 45 billion – from annual report – plus the value of CHF 16 billion AT1 bonds written to zero.