Beautiful Virgin Islands

Sunday, Jul 06, 2025

The One Big Winner And Many Losers Of UBS's Credit Suisse Crisis

The One Big Winner And Many Losers Of UBS's Credit Suisse Crisis

The UBS Group agreed to buy its smaller rival for about $3.3 billion in a share deal that includes extensive guarantees and liquidity provisions.

UBS Group AG is emerging as a rare winner in Credit Suisse Group AG's crisis after a historic, government-brokered deal that contains a raft of financial shock absorbers.

After a weekend of frantic talks to forge a solution before markets opened in Asia, the firm agreed to buy its smaller rival for about $3.3 billion in a share deal that includes extensive guarantees and liquidity provisions. Here are some of the big winners and losers to emerge from the deal.

The Winner: Ralph Hamers

UBS's chief executive officer will see the bank's wealth and asset management invested assets soar to about $5 trillion and got a special waiver to keep Credit Suisse's profitable Swiss unit that many analysts said was worth more than triple what UBS paid for the whole firm.

Ralph Hamers, the former ING Groep NV executive, and his team will have plenty to work through as they consider which businesses and people to keep, alter or jettison. But he'll have 56 billion francs of so-called badwill to help cover any writedowns, as well as 9 billion francs of guarantees from the Swiss government to take on certain losses. And the firm can access a huge liquidity line from the central bank.

While UBS will suspend its share buybacks for now, it said it's still committed to a progressive dividend.

The (Many) Losers:

Credit Suisse's Top Shareholders

Gulf investors old and new are hurting. Saudi National Bank's investment was stunning in its brevity: the lender lost 1.1 billion francs less than 15 weeks from when it finished buying its stake in Credit Suisse's latest capital raise. The firm thought it was buying at a bargain when it became the Swiss bank's largest shareholder just a few months ago. Saudi National Bank's chairman helped fuel the panic this week when he ruled out raising its stake in Credit Suisse.

The Qatar Investment Authority's pain came over a much longer period, as it first invested in the last financial crisis, but it likely lost an even greater amount. In addition to being the bank's second-biggest holder, it had owned in the past the firm's AT1 bonds that were written to zero in the deal, though it's unclear if QIA still held that debt. Shareholders won't even get to vote on this deal after Switzerland changed its rules to rush the merger through.

Ulrich Koerner

Credit Suisse's chief executive officer is expected to depart, having inherited a broken lender that he was unable to revive. Ulrich Koerner, who only took the top job last summer, had already mapped out a plan to cut back risk after a torrent of scandals and losses to focus more on wealth management. Bolder still was a plan to break out the bank's best-performing investment banking businesses. But the firm was unable to recover from a crisis of confidence that caused billions of dollars to exit in October. In recent days, the pressure intensified until the Swiss government was forced to step in.

Michael Klein

The former Citigroup Inc. investment bank head's grand plan to revive the First Boston brand and build it into a Wall Street advisory powerhouse now looks in ashes. Michael Klein, who had been tapped to lead the CSFB spinoff, was already in the process of selling his advisory boutique to Credit Suisse for a consideration of about $210 million when the bank's fortunes suddenly unraveled in recent weeks. While UBS Chairman Colm Kelleher didn't directly address CSFB at a press conference late Sunday, he did indicate that the firm was happy with its own investment bank and planned to cut back Credit Suisse's substantially as well as pare back risk.

AT1 Bondholders

Bond investors are typically better protected from losses than shareholders, but not in this case. The Swiss regulator will impose losses on $17 billion of high-risk debt known as Additional Tier 1 bonds that make up part of a buffer of debt and equity intended to prevent taxpayers from having to shoulder the bill for a bank's collapse. The total writedown marked the biggest loss yet for Europe's $275 billion AT1 market. Shareholders, who typically are first to take a hit in a writedown scenario, got at least a small consideration.

Swiss authorities, taxpayers

Finma became the first regulator to watch a bank deemed systemically important have to be rescued since the financial crisis. The Swiss government had to step in an provide billions of francs in guarantees to UBS and the central bank was forced to provide extensive liquidity backstops to facilitate the rescue, putting taxpayers at risk 15 years after they bailed out UBS. Swiss Finance Minister Karin Keller-Sutter acknowledged it was the only way to stabilize international financial markets. Lots of Swiss money is being put up to help absorb any shocks from the deal, from a 9 billion franc guarantee on possible losses to huge credit lines from the Swiss central bank.


...and the Late Exit


Harris Associates

For years, Harris Associates and stock picker David Herro were closely linked to the fate of Credit Suisse as its biggest shareholder. He'd been a vocal supporter of former CEO Tidjane Thiam during his tussles with the board after a spying scandal and stuck with the bank through years of scandals and losses. But, amid the latest restructuring plan in October and huge outflows, he finally threw in the towel. He said earlier in March that he'd exited the stake in recent months. While it's not clear at what price he sold at, he did manage to avoid the precipitous declines in the stock during recent weeks as the bank was pummeled by a crisis of confidence.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
×