Retail investors to challenge Credit Suisse-UBS merger

‘Takeover of the second largest Swiss bank had the character of horse trading’

Entrance of historic bank building of Swiss bank Credit Suisse, Zurich


The Swiss Association for the Protection of Investors (SASV) is launching a claim on behalf of retail investors in Credit Suisse following the firm’s merger with UBS in March.

The group cited both the price of the acquisition and the treatment of Credit Suisse shareholders as reasons for the action.

Over 500 shareholders, made up of former employees and small private investors, have joined the claim after being left with “almost worthless shares”, SASV said.

See also: UBS completes acquisition of Credit Suisse

The group said the exchange ratio of 22.48 CS shares per UBS share was determined without “any well-founded basis for decision-making” and was “far too advantageous for UBS”.

“This is also reflected in the course of the negotiations: UBS first offered a lump sum of CHF 1bn, then a lump sum of CHF 3bn. This compares with Credit Suisse’s equity capital of CHF 54bn at the end of March 2023. After deducting the purchase price, there is a so-called ‘bad will’ of CHF 51bn.

“Normally, companies pay goodwill, i.e. a premium on the net asset value, when they take over a company.”

SASV added: “The takeover of the second largest Swiss bank by the largest bank had the character of horse trading, in which the purchase price was arbitrarily determined.”

Back in April, a group of Credit Suisse AT1 bondholders hired litigation firm Quinn Emanuel Urquhart & Sullivan to represent their interests following the acquisition, which saw $17bn worth of AT1 debt being written off.

No shareholder vote

The merger was completed after Credit Suisse had initially agreed a deal for $54bn of extra funding with Switzerland’s central bank.

Shareholders were left unable to vote on the merger due to the nature of the emergency acquisition, which saw Swiss regulators greenlight the deal in the space of a weekend.

The wealth manager saw its shares plunge over 30% on 15 March as insolvency rumours spread.

The bank warned it had identified ‘weakness’ in its balance sheet and had put out a series of poor results updates of late. This all followed huge losses in 2021 stemming from its relationship with failed American hedge fund Archegos.

Fears over its collapse prompted a big sell-off across the market, with banks hit the hardest.

See also: Credit Suisse AT1 holders hire law firm to seek compensation

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