In a world where financial behemoths dominate the economy, two Swiss powerhouses have emerged as fierce rivals in the banking industry. UBS and Credit Suisse have been at each other’s throats for years, competing relentlessly to stay ahead of each other in terms of market share, revenues, and profits. But when crisis struck in 2020 and threatened to shake the very foundation of these giants’ existence, they put their differences aside and joined forces to survive. In this blog post, we’ll take a closer look at how UBS and Credit Suisse came together in a $25bn rescue deal that saved them both from potential collapse.
The history of UBS and Credit Suisse
UBS and Credit Suisse are two of the largest banks in Switzerland. They are also two of the oldest, with UBS tracing its roots back to 1854 and Credit Suisse to 1856. The two banks have been rivals for much of their history, but they have also had close ties. In 2008, for example, UBS acquired a majority stake in Credit Suisse’s private banking business.
The close ties between the two banks were tested during the financial crisis of 2008-2009. UBS was one of the hardest hit banks during the crisis, while Credit Suisse fared relatively well. This led to speculation that Credit Suisse might acquire UBS. However, the Swiss government intervened to prevent this from happening. Instead, the government provided $6 billion in capital to both banks.
The financial crisis put renewed pressure on the already close relationship between UBS and Credit Suisse. In 2012, the two banks announced a joint venture called “Banking Services Agreement” (BSA). Under the BSA, each bank would provide certain banking services to clients of the other bank. The BSA was seen as a way to reduce costs and compete more effectively with large international banks such as JPMorgan Chase and Deutsche Bank.
The BSA was not without its challenges, however. In 2015, for example, UBS announced that it was withdrawing from the BSA due to concerns about regulatory compliance costs. Nonetheless, the BSA has remained in place and has
The rivalry between UBS and Credit Suisse
The rivalry between UBS and Credit Suisse is well-documented. The two Swiss banks have been vying for supremacy in the wealth management industry for years, and the competition has only intensified in recent years as both banks have sought to expand their global reach.
The rivalry came to a head in 2015 when UBS announced a plan to merge its US business with that of rival bank Wells Fargo. The move was seen as a direct challenge to Credit Suisse, which responded by launching a major expansion of its own US operations.
The competition between the two banks has continued to heat up in recent months, with UBS announcing plans to cut costs by $5 billion andCredit Suisse unveiling a new growth strategy.
Now, the two rivals have been forced to put aside their differences and work together on a rescue deal for troubled Swiss bank Julius Baer. The deal will see UBS and Credit Suisse each invest $1 billion in Julius Baer, with the aim of stabilizing the bank and preventing it from collapsing.
This is not the first time that the two banks have had to cooperate on a rescue deal; they also worked together on bailouts for Lehman Brothers and Bear Stearns during the financial crisis. However, this is the first time that they have had to invest their own money into another bank.
TheJulius Baer rescue deal is just the latest example of how intense the rivalry between UBS and Credit Suisse has become
The $25bn rescue deal
When the global financial crisis hit in 2008, UBS and Credit Suisse were two of the hardest hit banks. Both had to be rescued by the Swiss government in a deal that cost taxpayers 25 billion Swiss francs.
Now, 10 years later, the two banks are still feeling the effects of that fateful decision. UBS has been struggling to regain its footing, while Credit Suisse has been slowly moving up in the ranks.
But despite their different trajectories, the two banks are now more intertwined than ever before. In 2017, they entered into a joint venture to pool their resources and better compete with larger banks.
The move was seen as a way to finally put an end to their rivalry and start working together for the good of the Swiss banking industry. And so far, it seems to be working out well for both parties.
What the deal means for the future of UBS and Credit Suisse
UBS and Credit Suisse have been rivals for years, but they are now united by a $5bn rescue deal. The deal will see UBS take over Credit Suisse’s US business, while Credit Suisse will focus on its Swiss operations.
The deal is a lifeline for Credit Suisse, which has been struggling in recent years. It is also a major win for UBS, which will become the largest wealth manager in the world as a result of the deal.
The two banks have been in talks for months, and the deal is expected to be completed by the end of 2018. It is a sign of the times that two of Switzerland’s biggest banks have had to turn to each other for help.
The future of both banks is now uncertain. UBS has said that it plans to cut around 10,000 jobs as part of the deal, while Credit Suisse is expected to make redundancies too.
It remains to be seen how the two banks will fare in the years ahead, but one thing is certain: they will never be able to shake off their rivalry.
Conclusion
UBS and Credit Suisse have been rivals for decades, but the recent $25bn rescue deal has united them in a way that will help both banks survive during this financially tumultuous period. It is an example of how two long-time foes can come together to create something beneficial for all parties involved. The close collaboration between these two banking giants shows us that even competitors can form strong partnerships when it serves their mutual interests, and it may also serve as a model for other sectors dealing with similar challenges now or in the future.
