UBS was preparing a Credit Suisse takeover scenario months before it happened in March. A document filed with the US Securities and Exchange Commission (SEC) provides insight into the process.

Just weeks before the takeover of Credit Suisse, the UBS board of directors deemed a takeover of its rival undesirable, according to the latest documents the Swiss bank recently filed with the US Securities and Exchange Commission (SEC). An Edgar filing provides insight into the processes leading up to the merger of the two credit institutions.

Between October 2022 and February 2023, a strategy committee of the UBS board of directors reviewed developments at Credit Suisse. In early December, management, on behalf of the Strategy Committee, made a preliminary assessment of the impact of a transaction with Credit Suisse if UBS were asked to take an active role in the rescue of its competitor. An initial assessment was presented to the Strategy Committee on December 19.

Further Analysis Needed

Subsequently, the Strategy Committee, at its meeting on February 20, and the Board of Directors, at its meeting on February 22, concluded that a takeover of Credit Suisse was not desirable for UBS. Still, further analysis was necessary to prepare for a scenario in which the competitor ran into serious financial difficulties.

In doing so, the Strategy Committee and the Board considered the uncertainty of a reliable valuation of Credit Suisse, its recent business performance and risks, other potential liabilities, and the overall uncertainty of the transaction.

The Board instructed management to monitor ongoing developments at Credit Suisse and to consider measures that could address UBS's concerns if UBS had to consider an acquisition of Credit Suisse.

Support from Morgan Stanley

From January through mid-March 2023, teams of UBS employees, outside legal counsel, and Morgan Stanley, which was asked to assist with the theoretical analysis, conducted financial analyses, according to the SEC filings.

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. UBS also reviewed the potential negative impact on its bank if Credit Suisse were to be wound down.