Credit Suisse sale to UBS was ‘surprising’, Standard Chartered CEO says

STANDARD Chartered CEO bill Winters on Tuesday (May 23) said the sale of Credit Suisse to UBS was “surprising” given the “unusual” terms of the deal, which prioritised shareholders over bondholders.

“The conclusion was very surprising to me, in terms of the way that the bank was resolved through this very unusual sale to UBS, with associated unusual payments to shareholders versus bondholders,” Winters told an audience at the Qatar Economic Forum, organised by Bloomberg.

Under the rescue deal, engineered by Swiss authorities over one March weekend amid global banking turmoil, UBS agreed to buy Credit Suisse for 3 billion Swiss francs (S$4.5 billion) in stock and to assume up to 5 billion francs in losses that would stem from winding down part of the business.

About US$18 billion in Credit Suisse’s Additional Tier 1 (AT1) debt was rendered worthless in the transaction, leading to litigation from bondholders.

Winters said the banking crisis was over but that a transformation of banks was still needed.

Speaking at the same forum, Qatar Investment Authority (QIA) CEO Mansoor Ebrahim al-Mahmoud said he thought UBS had got a “good deal” with the Credit Suisse takeover.

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Qatar’s sovereign wealth fund, Credit Suisse’s second-largest investor, has explored seeking redress for losses incurred in the takeover, Reuters reported on May 17, citing two people familiar with the matter.

The QIA sought legal advice on whether it had any claim against Swiss authorities, including through international arbitration, after the forced sale at a fraction of Credit Suisse’s market value, the two sources said.

UBS has flagged tens of billions of US dollars of potential costs – and benefits – from its takeover of Credit Suisse, underscoring the high stakes involved as it prepares to complete the rescue of its struggling Swiss rival.

The first rescue of a global bank since the 2008 financial crisis, which is backed by up to 250 billion Swiss francs in public funds, will create a wealth manager with more than US$5 trillion in invested assets and over 120,000 employees globally. REUTERS