The forced takeover of Credit Suisse by UBS is stirring up emotions around the world. But in terms of size, the deal only just makes it onto the podium in Switzerland.
The federally mandated sale of Credit Suisse to UBS boasts numerous superlatives in addition to its economic policy significance. The combined bank's balance sheet is worth about $1.6 trillion on paper, with plans to manage $5 trillion in client assets one day. And by the end of the year, 35,000 jobs could be eliminated worldwide. Those are some big numbers.
Glencore Represented Twice
Regardless, the merger of Switzerland's two largest banks wasn't the largest Swiss deal, according to a review of mergers and acquisitions (M&A) from KPMG (in German).
Top honors go to Zug-based commodity trader Glencore's $32 billion acquisition of Canadian mining company Teck Resources, according to an analysis released Tuesday by the Big Four consulting firm. It was involved on the sell side in Bunge's second-largest acquisition of Dutch agribusiness Viterra for about $17.3 billion.
High Volume
Credit Suisse's forced sale to UBS for around 3 billion Swiss francs ($3.4 billion) ranks only third. It was worth two-and-a-half times more on the stock market than what UBS paid for it, with the discrepancy between the purchase price and the market value being investigated by the Zurich Commercial Court.
Apart from such megadeals, which are important drivers for the M&A business and lucrative for banks, deal volume declined significantly compared to the previous year, with the number of mergers and acquisitions falling from 362 to 216, according to KPMG. Thanks to the few large deals, the transaction volume in the first half of the year was still significantly above the ten-year average at around $80.7 billion.
In the second half, KPMG expects another slight increase in volumes.
Slump for Investment Bankers
The study shows lots of money currently flowing out of Swiss «war chests» abroad, where 112 transactions in which Swiss companies acquired a company abroad were reported. That's more than twice as many as the reverse scenario when only 50 Swiss companies were acquired by foreign buyers during the same period. Private equity investors also kept a low profile, while still managing just under a third of the transaction volume.
The market situation continues to be difficult for investment bankers, which is not necessarily favorable given the Credit Suisse integration, where it was the market leader in Swiss investment banking. If Credit Suisse Switzerland is fully integrated at the beginning of September, which corresponds to UBS's base scenario, some bankers there are also likely to become redundant.
