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But the collapse of three US regional lenders in March left the firm looking like the next weakest link in the chain.
The Swiss government feared Credit Suisse would have quickly defaulted and triggered a global crisis, shredding Switzerland’s reputation for sound banking.
But its chosen option for dealing with the issue was certainly a boon to UBS, which will now swell to manage US$5 trillion of invested assets.
CONFIDENCE “EVAPORATED”
UBS chief Sergio Ermotti acknowledged in a recent interview with the SonntagsZeitung weekly that the bank had been “worried” about its competitor since 2016, and had among other things looked into the possibilities of buying it, for fear a foreign lender might snap it up.
He acknowledged that Credit Suisse may have survived for a time if the central bank had injected more cash, “but it would not have been enough, since confidence had evaporated”.
Since the takeover announcement in March, UBS has seen its share price soar 31 per cent.
But the bank still faces significant challenges, Vontobel analyst Andreas Venditti told AFP.
The US$29 billion “is a huge one-off gain, but this is just accounting”, he said, stressing that “the losses and costs will come later”.
The analyst, who a few months ago wondered in a note whether UBS had secured “the deal of the decade or a decade of headaches”, stressed that “it’s going to be a huge task”.
He said it would only become clear “whether it was worth it” after most of the restructuring is done three years down the line.
Parts of the business are continuing to “produce huge losses”, he said, warning that “many things can still go wrong”.
Swissquote analyst Ipek Ozkardeskaya agreed, recalling that “UBS was forced” into the merger.
Now it is up to the bank to “transform an ‘obligation’ to its advantage”.
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