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Mar 20, 2023

Investors call for an IPO of Credit Suisse’s national banking unit

Swiss government changed law to allow takeover without shareholder approval

Investors in Credit Suisse have called for an IPO of the rescued firm’s national banking division to preserve competition in the Swiss market.

Ethos Foundation, which represents more than 200 Swiss pension funds, says the takeover of Credit Suisse by larger rival UBS will damage investors, customers and the broader Swiss economy.

On Sunday, UBS agreed to acquire Credit Suisse for SFr3 bn ($3.2 bn) after clients pulled billions from the beleaguered firm, leaving it on the brink of collapse and stoking fears of a global banking crisis.

Credit Suisse Zurich building
Credit Suisse's headquarters in Zurich

The deal was ushered through by the Swiss government – which changed the law to remove the need for a shareholder vote – as well as Swiss market regulator FINMA and the country’s central bank.

‘Ethos Foundation regrets that certain strategic options – such as the separation and listing of the Swiss bank from Credit Suisse – were not pursued when it was still possible,’ says the shareholder group in a statement.

‘In this respect, Ethos proposes to the Swiss authorities… the possibility of separating the Swiss banking division of Credit Suisse from the rest of the UBS group and… [having] an IPO as soon as the situation has stabilized.

‘This would preserve jobs and maintain healthy competition, which would ensure the proper functioning of our economy.’

‘Doubly penalized’

Ethos Foundation says the removal of competition in the Swiss market, along with the lack of a shareholder vote on the takeover, means pension funds have been ‘doubly penalized’ by the weekend’s events.

‘All options will be examined in the coming days, including legal ones, to determine the responsibilities of this debacle,’ it adds.

UBS has been contacted for comment.

Credit Suisse saw withdrawals accelerate last week following the collapse of Silicon Valley Bank and two other mid-sized US financial institutions.

A $54 bn loan from the Swiss central bank failed to stem the crisis, leading authorities to step in over the weekend and orchestrate a takeover.

The combined businesses will have more than $5 tn in total invested assets and ‘reinforces UBS’ position as the leading universal bank in Switzerland,’ notes a UBS statement released Sunday.

‘This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue,’ says UBS chairman Colm Kelleher in the statement.

‘We have structured a transaction that will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’ strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors.’