The bankers at UBS built their fortune with a
uniquely Swiss proposition. Secrecy. Russian oligarchs, dictators, mafia
members, potentially terrorists out there using Swiss bank
secrecy to hide their money, launder their funds and get away with whatever
their crimes had been. At the core. They will not be subject to some
political influence because the Swiss government is leaving them alone. Or at least that's the perception. Hundreds of companies folded into UBS over its 16
decade run. The result is a global enterprise with tens of
thousands of employees now following a blockbuster acquisition of Credit
Suisse. Ubs Group is poised to take on the world. It creates an absolute behemoth that will swallow
up the entire market domestically in Switzerland as far as personal banking is
concerned and essentially obliterate competition. This could catapult UBS out of that basket of
peers alongside Deutsche Bank, BNP Paribas and HSBC and into the realms of JP
Morgan. How did UBS take Switzerland to the top of global
finance and what challenges are emerging as this massive bank becomes even
bigger? Swiss bankers have to keep client information
secret by law. I've talked to Swiss bankers who say the only
reason to have your money in a Swiss bank is because you want to hide that money there. And that's for two reasons. One is that the returns on investment generally
aren't as high in Swiss banks as they are in American banks or competitive banks around
the world. And also because the fees are pretty high there
compared to other banks around the world. So if you're paying more and earning less,
you're there for some other reason than maximizing your profit potential in Switzerland. You can go to prison for revealing client details. That's made it a magnet for foreign cash. Americans trying to hide money from the IRS,
Argentines trying to hide money from the Argentinian government. According to UBS, more than half of its invested
assets in its wealth management division come from people in the United States. In 2009, they admitted to using these laws to
help 47,000 Americans dodge taxes. Ubs also has a large domestic footprint taking
deposits from customers across the many Swiss cantons. This map shows where UBS had the most domestic
customers pre-merger. They've since grown. Both UBS and Credit Suisse have really strong
Swiss personal and corporate banking divisions. They have tried to focus on that and
the global wealth manager as key kind of profit centers, as pillars of
stability since the financial crisis and since they've had to try and quite
radically and quickly de-risk. They've done that quite successfully. Ubs says its founding values are displayed on the
logo three keys, symbolizing security, trust and discretion. That secrecy has been dented by recent
developments in the last two decades because particularly the US tax authorities and
together with them, other authorities have eroded some aspects of the secrecy. But it remains a distinctive feature. Today, with $5 trillion in assets invested. Ubs ranks in as one of the world's 30 largest
banks. Regulators call them global systemically
important banks or g-sibs. G-sibs deserve attention from the perspective of
global financial sector stability. When you look at the list, they tend
to be highly correlated with size and also to some extent with complexity and cross
border activity. Before the merger, both Credit Suisse and UBS
were in that list of the roughly 30 most systemically important banks
in the world set by the Financial Stability Board. Governments generally are reluctant to let banks
fail. So when a bank gets in crisis for one reason or
another, the typical response from government regulators is to move in and
broker a sale to some other bank which is bigger and healthier. That's more or less what happened when a bank run
mounted in Switzerland. This would potentially be Europe's most historic
banking combination if a deal would to come through since the financial crisis. Well, there have. Been a lot of talks about merging the two banks,
and it's been something that's been reported about for for a long time before it actually happened. But it wasn't until the crisis that it was worth
it for the Swiss government to put up the money to make the deal actually happen. As recently as February, the strategic board of
UBS looked at Credit Suisse and decided that it would not be desirable as an
acquisition target. Credit Suisse was pushed right to the brink and
the Swiss authorities were forced really to offer some pretty significant sweeteners to
the deal for UBS, including the $9 billion government loss backing and also
the wipe out of $17 billion worth of 81 Credit Suisse bonds,
which significantly reduced the risk for UBS, who got
their main rival in Switzerland, essentially for a massive cut
price. Ubs ultimately paid about $3 billion to buy its
rival. The Swiss government pledged over $100 billion in
emergency liquidity to push the deal forward quickly in the sale. Credit Suisse shareholders expect a trade in
about 22 shares to receive one share, which the. Swiss government mostly did is impose losses on
creditors and shareholders of Credit Suisse. So shareholders didn't lose
everything. They got a little bit of money, but not much. Most creditors were made whole, but some of them
weren't. So the holders of the most risky instruments
called contingent convertible or additional Tier one debt. These people lost all their money, which was
controversial. We knew that Credit Suisse had problems. Sorting through the problems may take time. Credit Suisse had a huge balance sheet, about
twice the size of Lehman Brothers when it collapsed. Had four days to do their due diligence on Credit
Suisse's entire business. They acknowledged in this SEC filing
that those risks are going to be present and that the haste with which they
were forced into this decision does mean that there are risks further down the
line. But as it stands. The opportunity that they see is to catapult us
right to the, you know, the very upper echelon of the global banking system. Ubs said acquiring Credit Suisse may make the bank
more competitive globally, despite the potential increase in operational complexity. Ubs in its current form, is comprised of around
370 various financial firms that it's absorbed over
the course of its two century history. Some of these founding banks led the
industrialization of Switzerland. Others opened early ventures abroad. Many of these preceding companies grew as wealthy
people stowed cash overseas to escape rising taxes. By the 1940s, Swiss banks emerged as a global
force, with Zurich becoming the third most important center behind New York and
London. There have been a lot of inquiries and
investigations, including their role during World War One or the predecessor banks, because UBS, as
we know it, is a product of multiple mergers. So there were different predecessors,
including now Credit Suisse, but also Swiss Banking Corporation, with which they
merged in 1998. A wave of bank failures rippled through the United
States in this era, creating an opportunity for international groups. The 2000 acquisition of PaineWebber for $10.8
billion was hugely transformative for UBS. It enabled them to reach across the Atlantic with
what has become their flagship wealth management arm. They are now the largest wealth manager in
the world, and that was an acquisition that was one of the most
strategically significant for any European bank this millennium. The 2007 housing crash put a dent in UBS
portfolio. Traders speculated that the firm might fold, so. The picture back in 2008 was UBS was a problem
bank among the two large Swiss banks. And Credit Suisse was the kind of, you
know, example to follow. And there are lots of ironies when you
look at those comparative developments. During the crisis, UBS took a massive hit. Their market cap went from $126 billion to 26 over the course of a couple of years. They were caught up in the Libor trading scandal. In the 20 tens, several banks were caught
manipulating global interest rates at UBS. Over 2000 instances of misconduct were
uncovered. There was a $2 billion hit, which was incredibly
substantial at the time, both reputationally and financially. What UBS is really been able to
do is is restore an element of stability and risk aversion that Credit Suisse
kind of failed to do over that period. But UBS has still been embroiled in various tax
evasion allegations that stem from that history of the
code of silence in Swiss banking. I'm pleased that we are closing a chapter, a 15
year old chapter of our own litigation inventory, let's call it. Ceo Sergio Ermotti is a veteran Swiss banker who
led UBS recovery from the global financial crisis. He rebuilt the bank into this kind of stable,
profitable machine. Ermotti, who left in 2020 with a reputation for
being quite ruthless, willing to to implement cuts, but being willing
to do what was necessary to steady the ship. He returned to the company in 2023 after stepping
down from the post in 2020. At UBS, many questions remain about looming job
cuts, litigation and the firm's future structure. Global banks like UBS answer to many regulators. When we think of Credit Suisse failing
immediately, we think, okay, what did the Swiss authorities do to monitor that bank? But actually, when you think about it, you have
to think about the UK authorities, the US authorities. Ubs may inherit some problems with this
acquisition. For example, the Senate Budget Committee reported
that Credit Suisse maintained Nazi linked accounts as recently as 2020. Credit Suisse, although it had pledged in 2014
that it was going to work with the US government and not allow Americans to have secret financial
accounts inside Switzerland. They weren't doing that. In every case, the bank may face more scrutiny as
it grows. I think Swiss authorities have realized that they
can't operate in a vacuum anymore domestically. Obviously, they love the idea that
they had this modus operandi of secrecy, of discretion domestically and
politically. That's that's a priority. And clinging on to that and resisting the
international pressure to ditch it is is also a priority. But, you know, if you want to have
decent trade deals and diplomatic relationships, you also need to, you know, have
give a bit of rope to, you know, to international partners. There is an element of pride and also perception
of benefits in the fact that, for example, a lot of profit accrues to UBS and some
of this goes into national coffers through group level taxation. That relationship between UBS and the Swiss
authorities, between UBS and the Swiss body politic, so to say, will be
fascinating to watch going forward. And I think we're we're we're at the. Beginning of a new phase now that there, so to
say, alone at the top.
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UBS needing to delay their quarterly financial results (as per reported today by Reuters and other outlets) tells me everything I need to know.
They already know, so does everyone else.
Credit Sus gave them a bag full of 🐈 💩 wrapped with 🐕 💩.
never forget that UBS apparently held a bank account for FUCKING OSAMA BIN LADEN
also veryyyy interesting quote at
8:41There was a $2 billion hit, which was incredibly substantial at the time, both reputationally
8:46and financially.
What he's referring to is Kweku Adoboi, the "rogue trader" that was a patsy for his dept, taking the fall for MASSIVE NAKED AND UNHEDGED TRADES in 2011 that went south when the US had its credit downgrade. I wrote about it extensively in the sub, and posted recently about it here:
https://www.reddit.com/r/Superstonk/comments/129p4bu/swissinfo_ermottis_second_stint_at_ubs_comes_with/
SWISSINFO: "Ermotti’s Second Stint at UBS Comes With a Sense of Déjà Vu". Yelling about this for years, Ermotti's 1st stint/UBS crisis was in large part from "rogue trader" Kweku Adoboli's $2.3 B loss...caused by NAKED/unhedged trading in ETFs at his UK dept at UBS. It's systemic, always has been.
edit: SUPER INTERESTING HE DOESNT SAY HIS GODDAMN NAME TO BURY THE LEDE
HIS NAME IS KWEKU ADOBOLI YOU FUCKS, AND YOU SOLD HIM UP THE RIVER
They’re painting them as bad guys helping bad guys and now becoming too big to fail.
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Yaharrrrrr me matey they have our treasure!
Yahoo has the GME and UBS predictions switched.