UBS resumes selling the bonds at the heart of Credit Suisse controversy (2024)

FAQs

What happened to Credit Suisse bondholders? ›

In the spring of last year, Credit Suisse collapsed amidst a string of missteps and scandals. A UBS rescue took place and, as part of the transaction, holders of the AT1 debt, a kind of “shock absorber” form of capital used by European banks since the 2008 financial crash, had their holdings wiped out.

UBS Switzerland AG has succeeded to all the rights and obligations of Credit Suisse (Schweiz) AG. The merger of the Swiss entities facilitates the migration of clients and operations from Credit Suisse (Schweiz) AG to the UBS platform, following business, client- and product-specific requirements.

As of 2018, Credit Suisse's revenue of $8.5 billion was roughly half that of UBS's $16.9 billion. However, Credit Suisse's wealth management business is much more profitable. Credit Suisse's pre-tax margin of 34.6% was almost 50% more than that of UBS's 23.6 %.

UBS to execute five waves of layoffs soon: 60% Credit Suisse employees to bear the brunt. The initial phase in June could see 25-30% of former Credit Suisse employees being laid off. Follow-up rounds are set for August through November, with expected savings totaling 12 billion Swiss francs ($13.2 billion).

Investors in a riskier type of Credit Suisse's bonds had the value of their holdings slashed to zero Sunday after Swiss authorities brokered an emergency takeover of the bank by rival UBS.

CHF 16b of Credit Suisse Additional Tier 1 bonds will be wiped after merger with UBS. Tier 2 and Senior bondholders are safe for now from any potential write-down.

He emphasized that UBS was “not too big to fail” and was “one of the best-capitalized banks in Europe,” with financial resources to absorb losses in excess of $200 billion. “Trust cannot be regulated. It was not too-low capital requirements that forced Credit Suisse into the historic weekend rescue,” he added.

The bailout of CS played out over only a few months. To recapitulate, on August 11, 2023, UBS had terminated the loss guarantee and PLB. By then, it had also paid back all emergency loans.

Shakeups of Credit Suisse's board, particularly in the aftermath of the Greensill and Archegos scandals, led to a loss of institutional knowledge at the lender. This left Credit Suisse's board unable to find long-term solutions to its shortcomings, leading to a “poor risk culture” inside the institution.

If you are looking for more stability in a firm, we believe UBS offers you and your clients a greater sense of security. Our firm stands as a global leader with a 160-year history of proven resiliency.

Is JP Morgan better than UBS? ›

J.P. Morgan scored higher in 8 areas: Overall Rating, Culture & Values, Diversity & Inclusion, Senior Management, Compensation & Benefits, Career Opportunities, Recommend to a friend and Positive Business Outlook. UBS scored higher in 1 area: Work-life balance.

UBS ranked #1 in Client Satisfaction with Full-Service Wealth Management Firms in the J.D. Power 2022 US Full-Service Investor Satisfaction Study. These results align with our own internal client satisfaction tool where clients rate UBS first among financial services, wealth management firms and luxury brands.

As part of the deal, UBS will wind down Credit Suisse's investment bank. Credit Suisse's largest shareholders, including SNB (9.9% stake) and sovereign wealth funds Qatar Investment Authority (6.8% stake) and Norges Bank Investment Management, are expected to take significant losses from the acquisition.

Safe and secure – our Online & Mobile Banking service. To protect your data and wealth, Credit Suisse ensures its systems, software, and networks are constantly updated in line with the latest (security) standards.

In the first quarter of 2024, UBS axed over a thousand jobs globally. It is reportedly commencing five major rounds of cuts in June. As of 31 March 2024, UBS employed 111,549 full-time equivalents employed, according to its first quarter results, marking a net decrease of 1,293 compared to end-2023.

Existing shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held. Unusually, the merger will not be subject to shareholder approval and is expected to complete by the end of 2023. As part of this process, Credit Suisse shares will be delisted from the Swiss and New York stock exchanges.

In March 2023, as part of an emergency package for rescuing Credit Suisse, the Swiss Financial Market Supervisory Authority (FINMA) made a surprising announcement that CoCos, or contingent convertible bonds, which form an integral part of Credit Suisse's additional Tier 1 (AT1) regulatory capital, were completely ...

In March, Swiss authorities forced Credit Suisse to merge with larger rival UBS amid fears it could collapse. The move rendered worthless $17bn (£13.5bn) of bonds held by investors. "Everything unravelled so quickly," said one bondholder in Singapore who spoke to the BBC anonymously.

In the event of a failure or likely failure of a bank, shareholders and bondholders may be bailed-in to absorb the losses, instead of a bail- out by taxpayers. As such, bondholders may lose the value of their holdings (in a write-down) or be converted into equity.