Credit Suisse Chairman Axel Lehmann previously spent nearly a decade at UBS before joining Credit Suisse in 2021 to oversee its recovery efforts.
Following an announcement the Swiss National Bank would loan Credit Suisse up to $54 billion, UBS Group CEO Ralph Hamers has cautioned his employees not to discuss business matters with their counterparts at Credit Suisse Group, following the announcement of their government-brokered combination, according to The Business Times.
In a memo to UBS employees, CEO Ralph Hamers has reminded them, “Please remember that, until this deal closes, Credit Suisse is still our competitor. We cannot discuss business matters with their employees or take any action that could be interpreted as a step towards the merging of business.”
The email comes after UBS agreed to purchase Credit Suisse in a transaction for 3 billion francs, which was reached in crisis discussions over the weekend.
Credit Suisse is among the 30 banks globally deemed too large to fail because of their importance to the financial system. Yet, the 167-year-old bank has been suffering in recent years, with losses and different concerns such as money laundering allegations.
UBS, Switzerland’s biggest bank, has agreed to pay 3 billion francs (($3.3 billion) to purchase Credit Suisse, in a transaction that UBS chairman Colm Kelleher has termed as an “emergency rescue.”
The accord was struck at hurriedly convened crisis discussions over the weekend, and it tries to address customer withdrawals and the considerable decrease in Credit Suisse’s shares and bonds over the previous week, after the failure of smaller American banks.
Despite getting a $54bn (£44.5bn) emergency lifeline from the Swiss National Bank, the markets remained dubious, and Credit Suisse’s shares plunged by 24%, triggering a larger sell-off in European markets.
Meanwhile, Bank of England officials have acknowledged they are in frequent touch with their colleagues at the Swiss National Bank as regulators and management consider Credit Suisse’s future.
Credit Suisse’s shares have witnessed a dramatic decrease in recent weeks, with trading being suspended after the share price plunged by as much as 21%. Last week, the bank stated that it had uncovered “significant flaws” in its 2021 and 2022 financial reporting systems.
Credit Suisse Chairman Axel Lehmann previously spent nearly a decade at UBS before joining Credit Suisse in 2021 to oversee its recovery efforts.
Meanwhile, Credit Suisse CEO Ulrich Korner had also previously worked at UBS before departing to join Credit Suisse, where he initially managed to salvage the asset management business before subsequently taking on the CEO job to turn around the whole bank.
In reaction, its largest sponsor, the Saudi National Bank, said that it would not acquire any further shares in Credit Suisse.
The current crisis of trust in the banking sector has taken two mid-sized American institutions and now Credit Suisse, which is regarded as one of the top 30 most significant banks internationally.
The recent bankruptcies of banks, particularly Credit Suisse, may be traced to a rapid spike in global interest rates. This has led to a fall in the value of secure assets that banks hold, generating anxiety among investors and contributing to a decline in the share prices of all banks. The banks deemed weakest have been hurt the hardest by this event.
According to a report by BBC, UBS Chairman Colm Kelleher indicated that the investment banking sector of Credit Suisse would be wound down, although no decision has been made yet on job cutbacks.
Kelleher noted that a detailed review of the problem is important before any action is made and the process must be carried out deliberately.
