UBS is poised to join the ranks of global megabanks after acquiring Credit Suisse for $3.2 billion. The UBS Group has been involved in a number of blockbuster mergers in the past. Over 370 legacy firms, including former domestic rivals, are within the modern company. Switzerland has remained stable and neutral during significant wars, becoming a haven for wealth worldwide. Today, international wealth management is the heart of UBS’s operation. The bank has invested over $5 trillion in assets post-merger, and over half its customers are American. Experts believe this is due to the unique discretion Swiss law offers. Bankers in Switzerland must protect client details, even when pressed by foreign authorities. “You can access their operations in Singapore, in New York, in more exotic places. But at the core, they will not be subject to some political influence because the Swiss government is leaving them alone, or at least that’s the perception,” said Nicolas Véron, a senior fellow at both the Peterson Institute for International Economics in Washington, D.C., and the Bruegel think tank in Brussels.
In recent years, both UBS and Credit Suisse have faced pressure from U.S. authorities to end dubious business practices. For example, in the 2010s, thousands of misconduct instances were uncovered at UBS in an international interest rate manipulation probe. Additionally, U.S. senators claim that Credit Suisse maintained accounts linked to Nazi clients as recently as 2020. Global watchdogs have been concerned for years that banks like UBS are too big to fail. The sudden and rapid flight of depositors from Credit Suisse brought those fears to life. In order to facilitate UBS’s rapid takeover of Credit Suisse, the Swiss National Bank pledged over $100 billion in liquidity support. In the deal, Credit Suisse shareholders expect to receive 22.48 shares of UBS for each share of Credit Suisse. Some bondholders plan to challenge the deal in court. “By and large, the Swiss government mostly imposed losses on creditors and shareholders of Credit Suisse,” said Véron. According to UBS Group AG, the acquisition could increase the bank’s global competitiveness and prepare it for the increased complexity.