The forced sale of Credit Suisse (CS) to UBS has brought some stability to the troubled bank. However, the low sale price and the decision by the Swiss Financial Market Supervisory Authority (FINMA) to write off almost CHF 16 billion worth of contingent convertible bonds (AT-1 bonds) have caused an outcry in the financial market. As a result, collective lawsuits are being filed, with the focus currently on Switzerland.
On one hand, thousands of CS shareholders have filed model lawsuits against the exchange ratio of CS to UBS shares in the sale of the bank. They are demanding twice the amount that UBS paid for CS.
On the other hand, AT-1 bond investors have lodged a complaint with the Federal Administrative Court against FINMA, which pushed through the write-off of the contingent convertible bonds by emergency decree.
These legal battles add to the challenges faced by UBS. The ongoing legal dispute with the Swiss government over allegations of illegal customer solicitation and money laundering continues to tarnish the bank’s reputation. UBS is expected to appeal the latest verdict, following CEO Ermotti’s previous experience of taking the bank to the appellate court.
In addition to the legal challenges, a Parliamentary Investigation Commission (PUK) is examining the emergency takeover of CS and the decisions made by the Federal Council. However, the PUK’s report is not expected until the end of 2024, causing delays in critical work and decision-making processes.
Meanwhile, the Swiss Federal Council is preparing to present an evaluation of the “Too big to fail” regulation for systemically important banks to Parliament. This evaluation is likely to address the question of additional capital requirements for UBS. While the bank’s CEO may have different priorities, the Finance Minister emphasizes the need to protect the state and taxpayers.
As UBS strives to become a global “Wealth Management Powerhouse,” it has attracted the attention of both small and large investors. Swedish financial investor Cevian has acquired UBS shares and expressed optimism about the bank’s potential to double its stock price within a reasonable timeframe. The upcoming UBS General Assembly will reveal whether these major shareholders are still supportive of the bank’s management or if they will push for even faster progress.
Overall, the UBS-Credit Suisse deal has stabilized the latter, but Credit Suisse investors are now demanding billions in compensation, highlighting that not all issues surrounding the troubled bank have been resolved.
This News Article was automatically generated by Bob the Bot (AI)
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