UBS Ends $10 Billion State Backstop That Helped Seal Merger
Comment of the Day

August 11 2023

Commentary by Eoin Treacy

UBS Ends $10 Billion State Backstop That Helped Seal Merger

This article from Bloomberg may be of interest. Here is a section:

The decision offers reassurance on “the health of the Credit Suisse non-core portfolio,” Citigroup analysts said in a note. “The early voluntary repayment could potentially also help in other matters, such as negotiating the retention of the Credit Suisse Swiss business.” 

The fate of the Swiss bank has been widely watched as Swiss-based companies and politicians have voiced concerns over the market power that the combined bank would exercise. UBS plans to make a decision in the third quarter on whether it will fully integrate it with its own Swiss unit or seek another option such as spinning it off or listing it publicly.

Eoin Treacy's view

The Swiss government essentially gifted Credit Suisse to UBS. In so doing they have given the impression that UBS is now too big to fail since it is the only remaining Swiss bank with global heft. Regardless of whether the rump of Credit Suisse is spun off, the dominant position now held by UBS is unassailable within the Swiss market.

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