Swiss bank UBS announced on Tuesday that it hopes to complete a takeover of its rival. Credit Suisse At the end of June, the merger represented a “unique opportunity to create value.”
Switzerland’s biggest bank posted a net profit of $1 billion, short of expectations of $1.7 billion, but recorded “significant capital inflows” in the same period, indicating customer confidence, a quarterly results report said.
The bank’s new managing director, Sergio Ermotti, returned to the position he held before the acquisition of Credit Suisse, “confirming his conviction that this transaction will contribute to strengthening the leading position of the Swiss financial center and benefit the entire economy,” a statement read.
On March 19, UBS agreed to buy its rival Credit Suisse, under pressure from authorities, for 3 billion Swiss francs (3.02 billion euros), with financial guarantees from the central government and central bank.
The deal saved Switzerland’s second-largest bank from bankruptcy, which would have caused “irreparable economic damage,” and Swiss Finance Minister Karin Keller-Sutter warned that “therefore, Switzerland must meet its obligations beyond its borders.”
The banking sector is under a lot of pressure as major central banks have hiked interest rates in an attempt to control inflation. Many companies, after years of benefiting from low-interest financing, fail to prepare for the current risks.
Bankruptcies of “Silicon Valley” banks in the United States and other regional US banks fueled investor fears, prompting them to sell bonds of banks seen as weak links.
By management’s own admission, Credit Suisse spent two years exposed to “fundamental weaknesses…in internal control” with multiple scandals.
Despite his administration’s efforts to promote a 3-year restructuring plan, it was unsuccessful.
France 24/AFP
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