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UBS Group AG (UBS - Free Report) crossed a significant milestone by completing the acquisition of Credit Suisse. UBS announced the deal in March 2023, in an emergency takeover involving government-backed efforts to fend off panic in the global banking system, following the collapse of Silicon Valley Bank.
As a result of the merger, Credit Suisse shareholders will receive one UBS share for every 22.48 outstanding shares held. With the deal closure, Credit Suisse Group AG was merged into UBS Group AG. The combined entity will operate as a consolidated banking group.
UBS Group AG will be managing two separate parent banks – UBS AG and Credit Suisse AG. Both these institutions will continue to own its own subsidiaries and branches, serve its clients and deal with counterparties. However, per a Financial Times article, UBS is likely to impose tight restrictions on Credit Suisse bankers, including a ban on complex financial products and acquiring new clients from certain high-risk countries.
Management of UBS is expecting the common equity tier 1 capital ratio to be around 14% for the second quarter of 2023. The metric is expected to remain at the same level throughout 2023. Further, the company is anticipating that Credit Suisse’s operating losses and significant restructuring charges will be offset by reductions in the risk-weighted assets.
The historic deal has been closed after signing the Loss Protection Agreement (LPA) with the Swiss government on Jun 9, 2023. The agreement will remain in effect until all the assets covered by the guarantee have been realized, or until the agreement is terminated.
UBS Group AG is likely to face potential losses upon the realization of a portfolio of certain non-core assets of Credit Suisse. Per the agreement, UBS will bear the first CHF 5 billion of the realized losses from such assets. Further, the agreement provides for a government guarantee covering realized losses up to CHF 9 billion over and above the loss borne by UBS.
It has been laid out that UBS will manage Credit Suisse’s non-core assets in a prudent and diligent manner, intending to minimize any possible loss and maximize the value realization on such assets. Also, UBS will bear the initial and ongoing external costs incurred by the Confederation and the Swiss Financial Market Supervisory Authority for the LPA.
UBS’s acquisition of its embattled local rival Credit Suisse, positions the former as a Swiss banking giant. Combining the resources of both institutions and gaining from the synergies, it will be providing enhanced global offerings to its clients. The combined entity will enjoy expanded geographic reach and access to higher expertise and enhanced capabilities.
UBS Group AG’s shares have gained 10.6% on the NYSE over the past six months compared with the industry’s growth of 6.9%.
BlackRock, Inc. (BLK - Free Report) signed an agreement to acquire London-based Kreos Capital, a private debt provider. The financial terms of the deal were not disclosed.
Closing of the transaction, subject to customary regulatory and closing conditions, is expected in the third quarter of 2023. The financial impact of the transaction will have no material impact on BLK's earnings.
KKR & Co. Inc. (KKR - Free Report) agreed to acquire Circor International, an industrial machinery maker, for $1.6 billion. The news was first reported by the Wall Street Journal.
After the acquisition, KKR will take Circor private as it seeks to double down on investments in the flow-control market.
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UBS Closes Credit Suisse Buyout, Becomes Swiss Banking Giant
UBS Group AG (UBS - Free Report) crossed a significant milestone by completing the acquisition of Credit Suisse. UBS announced the deal in March 2023, in an emergency takeover involving government-backed efforts to fend off panic in the global banking system, following the collapse of Silicon Valley Bank.
As a result of the merger, Credit Suisse shareholders will receive one UBS share for every 22.48 outstanding shares held. With the deal closure, Credit Suisse Group AG was merged into UBS Group AG. The combined entity will operate as a consolidated banking group.
UBS Group AG will be managing two separate parent banks – UBS AG and Credit Suisse AG. Both these institutions will continue to own its own subsidiaries and branches, serve its clients and deal with counterparties. However, per a Financial Times article, UBS is likely to impose tight restrictions on Credit Suisse bankers, including a ban on complex financial products and acquiring new clients from certain high-risk countries.
Management of UBS is expecting the common equity tier 1 capital ratio to be around 14% for the second quarter of 2023. The metric is expected to remain at the same level throughout 2023. Further, the company is anticipating that Credit Suisse’s operating losses and significant restructuring charges will be offset by reductions in the risk-weighted assets.
The historic deal has been closed after signing the Loss Protection Agreement (LPA) with the Swiss government on Jun 9, 2023. The agreement will remain in effect until all the assets covered by the guarantee have been realized, or until the agreement is terminated.
UBS Group AG is likely to face potential losses upon the realization of a portfolio of certain non-core assets of Credit Suisse. Per the agreement, UBS will bear the first CHF 5 billion of the realized losses from such assets. Further, the agreement provides for a government guarantee covering realized losses up to CHF 9 billion over and above the loss borne by UBS.
It has been laid out that UBS will manage Credit Suisse’s non-core assets in a prudent and diligent manner, intending to minimize any possible loss and maximize the value realization on such assets. Also, UBS will bear the initial and ongoing external costs incurred by the Confederation and the Swiss Financial Market Supervisory Authority for the LPA.
UBS’s acquisition of its embattled local rival Credit Suisse, positions the former as a Swiss banking giant. Combining the resources of both institutions and gaining from the synergies, it will be providing enhanced global offerings to its clients. The combined entity will enjoy expanded geographic reach and access to higher expertise and enhanced capabilities.
UBS Group AG’s shares have gained 10.6% on the NYSE over the past six months compared with the industry’s growth of 6.9%.
Image Source: Zacks Investment Research
UBS carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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BlackRock, Inc. (BLK - Free Report) signed an agreement to acquire London-based Kreos Capital, a private debt provider. The financial terms of the deal were not disclosed.
Closing of the transaction, subject to customary regulatory and closing conditions, is expected in the third quarter of 2023. The financial impact of the transaction will have no material impact on BLK's earnings.
KKR & Co. Inc. (KKR - Free Report) agreed to acquire Circor International, an industrial machinery maker, for $1.6 billion. The news was first reported by the Wall Street Journal.
After the acquisition, KKR will take Circor private as it seeks to double down on investments in the flow-control market.