• UBS Bank has been given permission by the Swiss government to take over Credit Suisse in a deal that will generate nearly $35 billion in profits for the bank.
• Credit Suisse has been plagued by scandals involving money laundering, bribery, tax fraud and subprime mortgage fraud.
• Analysts have expressed their caution towards UBS in light of several unknowns and risks associated with the takeover.
UBS Bank Secures Swiss Government-Backed Deal
The Swiss government has granted permission to banking giant UBS to take over Credit Suisse in a move that will net the former $34.8 billion in profits.
Credit Suisse’s Troubled History
Credit Suisse had long been plagued by scandal before its demise, including criminal convictions for facilitating money laundering, as well as connection to bribery and drug trafficking scandals. The bank was also accused of tax fraud and subprime mortgage fraud.
Analysts Cautious Ahead of Takeover
Analysts from Keefe, Bruyette & Woods have voiced their caution regarding UBS’ acquisition of Credit Suisse due to the many unknowns and potential risks associated with it. They suggested investors may be better off staying on the sidelines until visibility improves.
Shares Plummeting Ahead of Takeover
Shares of Credit Suisse (CS), which at one point were trading near $80, are now under a dollar at time of writing – further proof that UBS is getting an incredibly good deal out of this takeover process.
Conclusion
Despite recent troubles, Credit Suisse still represents a massive opportunity for UBS – one that could yield billions in profits if all goes according to plan during the takeover process.