Swiss regulators on Wednesday defended the rescue of Credit Suisse through a controversial takeover by rival bank UBS as the best solution with the least risk of spreading a wider crisis and severely damaging Switzerland’s standing as a financial center.
The merger was “the best option” and one that “minimized risk of contagion and maximized trust,” said Urban Angehrn, chief executive of the Swiss Financial Market Supervisory Authority, or FINMA.
“One can well imagine, what devastating effect the insolvency of a big wealth management bank of Credit Suisse AG would have had on Swiss private banking,” Angern said. “Many other Swiss banks could have faced a bank run, just as Credit Suisse did itself in the fourth quarter.” UBS Chairman Colm Kelleher expressed confidence about the takeover, saying the deal is expected to close in the next few months, alluding to the complexity of the first-ever merger of two “global systemically important banks.”
The UBS board was proposing a 10% increase to the 2022 dividend, totaling $7.3 billion after the bank recorded a net profit of $7.6 billion last year, while deciding to reallocate shares for the takeover and “temporarily suspend” all share repurchase programs, Kelleher said. “I understand that not all stakeholders of UBS and Credit Suisse are pleased with this approach,” he said.
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