Was rushed into Credit Suisse merger, says UBS

A regulatory filing showed on Tuesday (May 16) that banking giant UBS felt that it was rushed into buying rival Credit Suisse in a deal it did not want. UBS told its investors in a filing to US Securities and Exchange Commission that it had less than four days to carry out due diligence.

It estimated a hit of about $17 billion from the takeover.

UBS is Switzerland's biggest bank. It agreed to buy Credit Suisse as its finances worsened given the global situation.

Clients of Credit Suisse were spooked and began withdrawing money after Credit Suisse' involvement in a series of corporate collapses. The trend accelerated after US bank failures, which sparked fear of a bigger banking crisis.

The wave of deposit outflows and a major share-price drop prompted Switzerland's central bank on March 15 to offer Credit Suisse liquidity assistance.

On the very next day, UBS and Credit Suisse signed a confidentiality agreement. UBS then began its due diligence.

On March 19, the Swiss National Bank announced UBS would buy Credit Suisse for 3 billion Swiss francs ($3.4 billion) in stock and assume a loss of as much as 5 billion francs stemming from winding down parts of the business.

The final price was raised from an initial 1 billion francs, the filing showed.

Interest from UBS in buying Credit Suisse began in October when the ad hoc Strategy Committee of its board of directors reviewed its rival's distressed situation, according to the filing.

By that time, Credit Suisse was experiencing net assets and deposit outflows at levels that were substantially exceeding rates of the July September quarter, said UBS.

In early December, UBS management undertook a preliminary assessment of the consequences of a Credit Suisse purchase, which it presented to the Strategy Committee on December 19.

In February, the Strategy Committee and board of directors each concluded an acquisition was "not desirable" and recommended further analysis to prepare for a scenario in which Credit Suisse was in such difficulty that regulators could ask UBS to step in.

UBS said it carried out financial analyses from January to mid-March and assessed potential legal structures and possible measures to address concerns, as well as any negative impact to itself, in case authorities proposed an acquisition.

(With inputs from agencies)