Following the accelerated takeover deal of rival Credit Suisse over the weekend, UBS is already bracing for a tough deal. The union of the two rival banks will give rise to a mammoth group, with 1.5 trillion assets under management plagued by inefficiencies and overlaps that UBS will have to solve through a complex restructuring.
Difficulties in absorbing Credit Suisse caused credit rating agencies Moody's and S
The two corporations have 120,000 employees around the world and UBS plans to reduce the workforce by thousands of jobs to save 6,000 million dollars a year. The duplications are especially significant in Switzerland, where unions and the political class are already calling for a specific solution that includes a possible spin-off of the local business.
UBS's plans also include divesting Credit Suisse's investment banking business, which is less profitable than wealth management.
The restructuring may be accompanied by litigation and exceptional control by the Swiss authorities that embarrasses UBS workers. The Ethos Foundation, a firm that represents between 3% and 5% of Credit Suisse's capital, yesterday announced possible legal action against the bank's sale agreement from this weekend, in which, it says, they have not preserved shareholder rights.
There may also be a conflict with the owners of the CoCos, the bonds convertible into shares. They are the main victims in the operation proposed on Sunday and among them are giants such as Pimco or Invesco, to which millions of losses are attributed.
Meanwhile, the Swiss government has agreed to temporarily suspend part of Credit Suisse's executive bonuses in accordance with Swiss law, which allows measures of this type to be imposed "if a systemically important bank receives direct or indirect state aid from federal funds."
Despite these difficulties, UBS shares rose 12% yesterday on the stock market and the European banking sector recovered in the markets. The stock markets recovered between 1.5% and 2% in the reference indices of London, Paris and Frankfurt, while in Spain the Ibex posted a rise of 2.45%, the highest since October last year, encouraged precisely because of the banks. Sabadell grew 7.4%, compared to BBVA's 5.3%, CaixaBank's 5.1%, Bankinter's 5% and Santander's 4.6%.
Part of the increases are due to messages of confidence from the ECB in the financial system and the announcement on Monday by the European authorities that, in the event of a bank rescue, the already agreed priority orders will be respected, despite the decision of the Swiss authorities to break orthodoxy and punish CoCos, which has generated a small crisis in the issuance market for this type of debt.
The president of the Supervisory Board of the ECB, Andrea Enria, assured yesterday in an appearance in the European Parliament that the confidence of depositors in European banks is "strong" and that the entities are "well positioned". He warned, however, that increases in interest rates will require banks to pay more attention to the emergence of risks associated with liquidity or financing problems. He also ruled out restricting the distribution of dividends by European banks.
