UBS Group AG’s board of directors concluded that buying Credit Suisse Group AG wasn’t desirable just weeks before the firm agreed to a historic, government-brokered deal to purchase its struggling rival.
(Bloomberg) — UBS Group AG’s board of directors concluded that buying Credit Suisse Group AG wasn’t desirable just weeks before the firm agreed to a historic, government-brokered deal to purchase its struggling rival.
The revelation, included in UBS’s recent filing with the US Securities and Exchange Commission, provides a glimpse into the tension leading up to the planned shotgun marriage between the Swiss banking giants. After days of high-stakes drama, UBS agreed in March to take over Credit Suisse, which had been hobbled by a series of scandals, leadership changes and legal issues.
A strategy committee of UBS’s board reviewed developments at Credit Suisse between October and February. In December, the bank’s management assessed what could happen if it were asked to help rescue the struggling lender, UBS said in its filing last week. In deciding that it wasn’t a preferred move, the UBS board considered the challenges in valuing Credit Suisse, the risks and further possible liabilities.
In meetings in late February, UBS’s strategy committee and board of directors “each concluded that an acquisition of Credit Suisse was not desirable for UBS Group AG but that further analysis was necessary in order to prepare for a scenario where Credit Suisse was in serious financial difficulties,” according to the filing.
Less than a month later, UBS agreed to pay 3 billion francs ($3.4 billion) for its rival in an all-stock deal that includes extensive government guarantees and liquidity provisions. The price per share marked a 99% decline from Credit Suisse’s peak in 2007. The deal is expected to close by early June.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.