Credit Suisse Stock Plunges Over 50% after UBS Takeover

Swiss bank stock Credit Suisse (CS) is currently down 54% at the moment after another Swiss banking giant, UBS, agreed to acquire Credit Suisse for $3.2 billion. Interestingly, though, Credit Suisse’s market cap, sitting at $3.9 billion, is still above the deal price. Overall, the deal was made possible after the Swiss government changed the law to allow the acquisition to proceed. The purchase of Credit Suisse, which has faced significant financial difficulties in recent years, will give UBS access to the bank's wealth management, asset management, and Swiss universal banking capabilities.

However, the acquisition has raised concerns about shareholder rights, as the Swiss government unilaterally eliminated Credit Suisse shareholders' voting rights during the acquisition process. This move has been described as unprecedented, and some have likened the situation to "Russia in Zurich."

Credit Suisse shareholders were left without a say in the acquisition, which has raised questions about the fundamental rights of investors in publicly traded companies. While the deal provides short-term stability to the global banking sector, the long-term implications for shareholder rights remain to be seen.

The combined bank will be a gigantic lender, with over $5 trillion in total invested assets. UBS Chairman Colm Kelleher has described the acquisition as an "emergency rescue" for Credit Suisse, and the deal has been structured to preserve the value left in the bank's business while limiting UBS's downside exposure.

Conclusion

UBS's acquisition of Credit Suisse is a significant move in the banking industry that has been made possible by the Swiss government's unprecedented decision to eliminate shareholder voting rights. While the acquisition will provide UBS with access to valuable capabilities, the long-term implications for shareholder rights are unclear. Meanwhile, CS stock is taking a beating.

CS stock chart