UBS chair says Credit Suisse integration will take up to four years

By Scott Kanowsky 

Investing.com -- UBS Group AG (SIX:UBSG) is expected to need three to four years to fully bring Credit Suisse Group AG (SIX:CSGN) into its operations, chairman Colm Kelleher told shareholders at an annual general meeting on Wednesday.

In a statement, Kelleher said the timeline for the completed integration excludes the wind-down of the non-core portfolio of Credit Suisse's investment banking unit. The tie-up will generate an annual cost reduction of more than $8 billion by 2027, Kelleher added.

The comments come after a run on deposits last month brought Credit Suisse to the brink of failure. The Swiss government stepped in to hurriedly broker a marriage between Credit Suisse and its larger rival UBS in a bid to prevent a collapse of the country's banking system.

Kelleher backed the $3.25B transaction, arguing that swift action was necessary to preserve the stability of the financial sector. He explained that this sense of urgency led Swiss authorities to bypass the shareholder approval typically required for a deal of this magnitude - a development he described as "unfortunate."

"I understand that not all stakeholders of UBS and Credit Suisse are pleased with this approach. However, all parties and particularly the Swiss authorities consider this solution the best of all available options," Kelleher said.

Investors - and many in Switzerland - have been angered by the agreement. Credit Suisse's final AGM earlier this week was marked by protests over the implosion of the 167-year-old lender, with chair Axel Lehmann saying he was "truly sorry" about its failure.

Speaking at the UBS event in Basel, the 65-year-old Kelleher vowed to build on the strength of the combined entity, but flagged that folding in Credit Suisse still holds "significant execution risks." Once fully integrated, the new business will oversee more than $5 trillion in assets, which would make it the fourth-biggest bank in the world.

An initial hurdle may come from the Swiss government itself. Parliamentarians are set to meet to discuss the outlook for the combined group after Easter. Some lawmakers have already suggested that, due to competition concerns, Credit Suisse's consumer banking unit could be carved out and listed as a separate company.

A survey from political research firm gfs.bern, which was cited by Reuters, found that a majority of Swiss voters do not support the merger due to similar worries.