Switzerland's largest bank was gaming takeover scenarios months before the forced rescue. Documents filed with the SEC provide fresh insight into what happened.

Just weeks before the takeover of Credit Suisse, the UBS board of directors had deemed the step undesirable, according to preliminary Edgar filing at the end of April with the US Securities and Exchange Commission (SEC).

According to the disclosure, a UBS board of directors strategy committee reviewed developments at Credit Suisse between October 2022 and February 2023. In early December, management, on behalf of the committee, made a preliminary assessment of the expected impact of any potential transaction with Switzerland's then second-largest bank, particularly if UBS was asked to take an active role in rescuing its competitor. That initial assessment was then presented to the strategy committee on December 19.

Further Analysis Needed

Subsequently, the committee, at a meeting on February 20, and the board, which met two days later, came to the view that taking over Credit Suisse was not a desirable outcome for UBS. At the same time, further analysis was undertaken in order to prepare for the eventuality that its main domestic competitor would run into severe financial difficulty.

In doing so, the committee and the board considered the uncertainty of being able to value Credit Suisse reliably. It also looked at recent business performance, risks, and other potential liabilities. The only certain thing appeared to be the overall uncertainty of any transaction.

Still, the board instructed management to monitor ongoing developments and to consider any measures that could address the group's concerns if it had to seriously consider acquiring Credit Suisse.

Support from Morgan Stanley

From January through mid-March 2023, reams of UBS employees, outside legal counsel, and Morgan Stanley, which was commissioned to help, conducted several financial analyses, according to the SEC filing.

They evaluated potential legal structures and measures that could address UBS's concerns in a scenario where the Swiss government actively supported UBS's acquisition of Credit Suisse.

As part of that, UBS also considered the potential negative impact on the group should Credit Suisse need to be wound down.