UBS executives Wednesday sought to assure investors that Switzerland's largest bank can make its unexpected takeover of Swiss rival Credit Suisse work and payoff for its shareholders.
While describing the most prominent bank rescue since the global financial crisis as a milestone for the industry and a significant challenge for the bank, Chairperson Colm Kelleher told UBS shareholders it also meant "a new beginning and huge opportunities ahead for the combined bank and for the Swiss financial center as a whole."
Last month, Swiss authorities announced UBS would buy Credit Suisse in a shotgun merger to stem further banking turmoil after the smaller lender had come to the brink of collapse.
After a run on deposits, the Swiss government turned to UBS, which agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion), while the Alpine state put up over 200 billion francs of support and guarantees.
Kelleher told the bank's shareholder meeting in Basel that UBS was confident in successfully managing Credit Suisse's integration and that the combined bank would remain well-capitalized.
"We believe the transaction is financially attractive for UBS shareholders," he said.
The hastily arranged rescue angered and unsettled both banks' shareholders and many in Switzerland.
A survey by political research firm gfs.bern found that most Swiss did not support the deal that would create a financial institution with assets double the size of the country's annual economic output.
As shareholders expressed their frustration about being kept in the dark, with one calling it "an insult," some also voiced concerns about potential job losses and the new giant bank's adverse impact on competition.
Vice chairperson Lukas Gaehwiler sought to quell such fears saying there were around 250 banks in the country and, therefore, enough competition.
He also said it was too early to speculate about jobs before the merger had been completed, which he expected to happen within a few months.
On Sunday, the Swiss daily Tages-Anzeiger cited an unnamed senior UBS manager saying that the combined group's workforce could shrink by 20%-30%.
All options on the table
Gaehwiler also said that "all options are on the table" concerning Credit Suisse's domestic business, which would continue to operate under its old brand in Switzerland for the foreseeable future.
In contrast to its smaller rival, UBS had been on a steady course. It reported a net profit of $7.6 billion for 2022 and strong inflows in wealth management, the company's flagship division.
Looking at how to navigate the mammoth task of integrating Credit Suisse, the success on which Switzerland depends, UBS has already taken the first steps.
Last week, the bank announced it had rehired Sergio Ermotti as chief executive to steer the massive takeover – a surprise move to take advantage of the Swiss banker's experience rebuilding the bank after the global financial crisis.
Addressing shareholders for the final time as chief executive, Ralph Hamers acknowledged the merger has led to new priorities for the bank, bringing a change at its helm.
"The acquisition of Credit Suisse will be a major challenge," Hamers said, echoing the bank's chairperson in highlighting new opportunities.
"It is expected to create a business with more than $5 trillion in total invested assets," he said.
Wednesday marks Ermotti's first official day back on the job, but he was not expected to attend the annual general meeting.
The meeting comes a day after executives at Credit Suisse faced their shareholders, and chairperson Axel Lehmann apologized for leading the bank to the verge of bankruptcy.
On Tuesday, Reuters also reported that the Bank of England had approved UBS' takeover of Credit Suisse in Britain, a key market for the Swiss lenders racing to close the rescue deal.
UBS also secured a temporary green light from European Union antitrust regulators to complete its acquisition of Credit Suisse but will still have to request clearance under EU merger rules, the European Commission said.