UBS Chairman Plots Merger With Credit Suisse To Create European Banking Titan: FT

At a time when the global economy is facing a slowdown, two leading European banks are pondering the possibility of upscaling by merging business operations.  

What Happened: UBS Group AG UBS and Credit Suisse Group AG  CS are chalking out a merger plan, according to the Financial Times.

If the deal goes through, it could be the establishment of a European behemoth in the wealth management and the investment banking space, FT noted. However, no formal statements regarding the matter have been released yet.

Swiss publication Inside Paradeplatz originally reported the merger talks, claiming that UBS Chairman Alex Weber was the driving force behind the stratagem called "Project Signal."

Weber used external consultants to determine the feasibility of the deal, according to FT. 

Some of the determining factors for the merger include renewed interests in consolidating banking entities across Europe after the pandemic outbreak, and a pressure to implement cost-cutting initiatives. On the other hand, facing regulatory scrutiny over antitrust concerns could be a potential setback to the merger, as per FT.

Why Does It Matter: Inside Paradeplatz hinted that a deal could be agreed upon sometime early next year, and Europe could witness the birth of a new financial titan by the end of the year. But estimates also suggest the merger could lead to an overall 10% to 20% job cuts, which is approximately around 15,000 worldwide.

The two banks aren't yet in any formal discussions over the merger, FT noted.

Price Movement: UBS stock rose 2.12% higher to end the Monday’s trading session at $12.52. Whereas Credit Suisse stock gained 4% during trading hours and an additional 0.08% in the after-hours to close at $11.19.

Photo courtesy: Credit Suisse Group AG