Swiss mega-bank has scope to shrink to greatness 5 Apr 2023 Swallowing Credit Suisse propels UBS into the big leagues, with $3.4 trln of wealth assets and more dealmaking fees than Citi. Staying large means taking on volatile units and risky clients. Unlike previous empire-builders, CEO Sergio Ermotti has a remit to slash aggressively.
Capital Calls: Illumina’s odd bedfellows 3 Apr 2023 Concise views on global finance: The FTC’s order that Illumina unwind its Grail acquisition puts head commissioner Lina Khan on the same side as Carl Icahn. Khan opposes the deal because Illumina can raise prices, while the activist thinks the deal doesn't make sense.
Goldman gently embraces both sides of hostile M&A 31 Mar 2023 The preferred adviser to reluctant takeover targets is benefiting from its broadened horizons. Working with aggressive suitors Public Storage and Emerson Electric helped keep bankers busy amid a 45% slump in deals. Merger culture has changed, as has Goldman’s broader strategy.
Swiss anger will sour UBS’s deal of the century 31 Mar 2023 Politicians and citizens are unhappy about job cuts and future risks arising from the bank’s $3 bln state-backed Credit Suisse rescue. Parliament fury may force returning CEO Sergio Ermotti to tweak the deal. Either way, an unsavory domestic whiff could hang over UBS for years.
How post-2008 bank rules led to a 2023 problem 30 Mar 2023 After the last crisis, regulators pushed lenders away from fickle market-based finance to deposits instead. Yet Credit Suisse and Silicon Valley Bank showed that not all customer cash is stable. Applying the same fix again is impossible, which means the problem is here to stay.
Bank rescue real estate turns from dowry to downer 30 Mar 2023 In 2008, failed lenders like Bear Stearns owned prime property that helped underpin value for buyers. But Credit Suisse sold off much of its real estate before UBS swooped. Its long-term leases may prove a headache as remote working shrinks demand for office space.
Alibaba hands parched dealmakers a glass half-full 30 Mar 2023 The $250 bln e-commerce giant’s six-way split will prompt bankers to dust off pitchbooks for peers like Tencent and Baidu, too. The bold can spread the net wider to carmakers and more. With M&A and other fees in a slump, it’s the best chance in a while to drum up business.
Boomerang UBS boss ticks several important boxes 29 Mar 2023 Sergio Ermotti is returning as CEO after less than three years. The suboptimal governance move highlights a dearth of senior banking talent. But Ermotti’s record of shrinking an investment bank – and his Swiss passport – will be vital in the tricky integration of Credit Suisse.
Switzerland casts Asian bankers in a rich light 29 Mar 2023 Credit Suisse’s blow-up will speed up a rethink about where crazy rich Asians will park $180 trln of household wealth. Global banks’ risk appetite is shrinking even as HSBC and others ramp up in the region via acquisitions. Rising giants like Singapore’s DBS and UOB will benefit.
Bank health barometer could use own health warning 28 Mar 2023 Stock market investors interpreted last week’s jump in Deutsche Bank’s credit default swaps as a sign of distress. Yet thin trading in parts of the $12 trln market for speculating on creditworthiness can exaggerate moves. Add social media and it can feed self-fulfilling spirals.
Credit Suisse rescue sends shockwaves far and wide 23 Mar 2023 The ailing Swiss lender was saved by UBS with a $3 bln takeover. In this Viewsroom podcast, Breakingviews columnists debate why the deal pushes up bank funding costs, how the new mega-lender affects Switzerland’s financial system, and why bank deposits are becoming less reliable.
Swiss CoCo shakeout may yet help bank regulators 22 Mar 2023 The market for quasi-equity bonds is reeling after Credit Suisse wiped out its own ones. The higher cost of issuing the securities means banks may now roll over their maturing debt, rather than replace it as per the market norm. That could actually help financial stability.
Bank woes expose gaps in EU safety net 22 Mar 2023 As the US and Switzerland scramble to head off contagion, the European Union is watching from a shaky perch. While the euro zone probably could fend off a new banking crisis, it lacks some tools for doing so. Even a backstop for insuring retail deposits remains out of reach.
Saudi is far from the last Western bank bagholder 21 Mar 2023 Credit Suisse’s rescue by UBS will cost top shareholder Saudi National Bank over $1 bln. Abu Dhabi’s ADIA and Singapore’s GIC and Temasek also caught a falling knife after buying Western banks in 2007. Politics, and the Gulf’s growing oil riches, imply further loss-making punts.
Switzerland takes CoCos to point of non-viability 20 Mar 2023 Holders of Credit Suisse’s $17 bln of contingent capital will lose the lot despite UBS paying $3 bln for its rival’s shares. The bonds boomed after the last crisis, but uncertain conditions make them riskier than bank equity. If investors flee, they’ll be less useful for banks.
UBS salvages most value from Credit Suisse wreck 19 Mar 2023 The Swiss bank is scooping up its ailing arch-rival for just $3.2 bln in a state-arranged rescue. In return for shoring up confidence it gets a balance sheet backstop, a competition waiver, big savings and a giant capital boost. It also becomes bigger and more systemic than ever.
Startups lost a wheel greaser with SVB blowup 17 Mar 2023 Venture capital funding was drying up before the collapse of Silicon Valley Bank. But SVB offered loans to new companies and played an important role bridging capital calls between VC managers and investors. Even with one fewer player, the industry gets rustier.
Credit Suisse puts new dent in Swiss bank armour 17 Mar 2023 The Alpine country’s solidity is its main selling point for wealthy clients. Yet for the second time in 15 years, authorities have rushed to halt a spiralling crisis of trust at a big Zurich lender. Shoring up the Swiss financial system will only partly repair the damage.
Credit Suisse’s cash line is just a stopgap 16 Mar 2023 The lender will borrow up to $54 bln from the Swiss National Bank to boost liquidity. The move reassured investors, but won’t necessarily stop clients pulling money. Regulators and the government will need a more permanent solution, but none of them are particularly appealing.
Goldman’s new strategy gets baptism of fire 15 Mar 2023 Its traders bought bonds from SVB as its bankers tried to help plug the hole that was left. Colleagues in investment may now be able to pick up troubled assets in the wreckage. It’s true to boss David Solomon’s One Goldman vision, though ideally the client lives to tell the tale.