Coordinated Centralized Banking and UBS/CS Merger

Nasdaq, Gold, SNB

Well global central banks were busy over the weekend and it seems that now the deal on the table is a takeover by UBS of Credit Suisse. Here is the announcement direct from CSuisse:

Credit Suisse and UBS have entered into a merger agreement on Sunday following the intervention of the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority FINMA (FINMA). UBS will be the surviving entity upon closing of the merger transaction. Under the terms of the merger agreement all shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse. Until consummation of the merger, Credit Suisse will continue to conduct its business in the ordinary course and implement its restructuring measures in collaboration with UBS. The Swiss National Bank will grant Credit Suisse access to facilities that provide substantial additional liquidity. On March 19, 2023, Swiss Federal Department of Finance, the Swiss National Bank and FINMA have asked Credit Suisse and UBS to enter into the merger agreement. Pursuant to the emergency ordinance which is being issued by the Swiss Federal Council, the merger can be implemented without approval of the shareholders. The consummation of the merger remains subject to customary closing conditions. -Credit-Suisse.com

Key points from Zerohedge:

• All shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse as merger consideration. This exchange ratio reflects a merger consideration of CHF 3 billion for all shares in Credit Suisse.

• The merger transaction remains subject to customary closing conditions. Both parties are confident that all conditions can be met. The merger is expected to be consummated by end of 2023 if possible.

• The Swiss National Bank will grant Credit Suisse access to facilities that provide substantial additional liquidity.

• For the purpose of a seamless integration of Credit Suisse into UBS, UBS is expected to appoint key personnel to Credit Suisse as soon as legally possible.

• Credit Suisse continues to operate in the ordinary course of business and implement its restructuring measures in collaboration with UBS.

• UBS has expressed its confidence that the employment of the staff of Credit Suisse will be continued.

Will this be enough and will this deal even go through? The Saudi National Commercial Bank owns as of the last filing over 394 M Shares almost 10% of the total outstanding stock. We feel that if this is not approved and it doesn’t go through that the repercussions could lead to a much wider fall out.

We also took a peek at the SNBs balance sheet and we have noticed that their loss provisions section known as “Provisions and Equity Capital” is down about 37% YoY:

Source: SNB, magnelibra.substack.com