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Credit Suisse acquisition expected to be accretive to UBS's EPS by 2027

Felicia Tan
Felicia Tan • 3 min read
Credit Suisse acquisition expected to be accretive to UBS's EPS by 2027
It is also expected to create a business with over US$5 trillion ($6.71 trillion) in total invested assets and sustainable value opportunities for UBS, said the bank on March 19. Photo: Bloomberg
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The acquisition of Credit Suisse is expected to be accretive to UBS’s earnings per share (EPS) by 2027. The bank also remains capitalised well above its target of 13%.

It is also expected to create a business with over US$5 trillion ($6.71 trillion) in total invested assets and sustainable value opportunities for UBS, said the bank on March 19 (Central European time).

The move will “further strengthen UBS’s position as the leading Swiss-based global wealth manager with more than US$3.4 trillion in invested assets on a combined basis, operating in the most attractive growth markets,” UBS adds.

Following the acquisition, the combined business will be a leading asset manager in Europe with invested assets of more than US$1.5 trillion.

Shares in Credit Suisse opened 63% lower at 0.69 Swiss francs (99.79 cents) from 1.86 Swiss francs while shares in UBS opened 13.8% lower at 14.82 Swiss francs from 17.20 Swiss francs following news of the acquisition.

A Bloomberg article on March 20 reported that some 16 billion Swiss francs worth of risky notes from Credit Suisse were rendered worthless after the takeover by UBS Group.

See also: MAS fines Credit Suisse $3.9 mil for misconduct by its relationship managers

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” says UBS chairman Colm Kelleher.

“Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors,” he adds.

UBS’s CEO Ralph Hamers says the combination of both banks will “build on UBS’s strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities”.

See also: Credit Suisse's Singapore private bankers moving to UBS offices

He adds that the combination will support UBS’s “growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”

Further to the statement by UBS, the bank said that the discussions were initiated jointly by the Swiss Federal Department of Finance, Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank and that the acquisition has their full support.

Following the completion of the acquisition, Kelleher will be the chairman and Hamers will be the group CEO of the combined entity

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