In a significant development, UBS (NYSE:UBS) has successfully finalized the acquisition of its crisis-hit rival, Credit Suisse. While the merger will create a Swiss banking giant and strengthen UBS’ competitive positioning as an asset manager, the bank will likely impose strict restrictions on Credit Suisse bankers, the Financial Times reported.
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Per the report, UBS has listed nearly two dozen “red lines” to impose tight restrictions on Credit Suisse bankers, including a range of activities like a ban on complex financial products and new client acquisitions from high-risk countries.
The move shows UBS’ conservative risk approach and promotes a strong culture and quality service. UBS also finalized a deal with Swiss authorities for protection against losses related to its Credit Suisse takeover. This is important as UBS took over a bank that faltered due to scandals and missteps.
UBS’ takeover of Credit Suisse came at the behest of the Swiss government. Per the agreement, Credit Suisse’s shareholders will receive one UBS stock for their 22.48 shares.
Further, Credit Suisse stock and its American Depositary Shares will be delisted from the exchanges.
UBS to Emerge as a Leading Asset Manager in Europe
UBS will go through a complex integration process and will announce workforce reduction. Meanwhile, the combination is expected to create a business with over $5 trillion in total invested assets. Further, the deal strengthens UBS’s competitive position, making it the top asset manager in Europe.
Also, the deal is likely to generate significant cost savings and be earnings accretive to UBS by 2027.
What is the Price Target for UBS Stock?
The completion of the Credit Suisse takeover will extend UBS’ share in the domestic market and make it a leading wealth manager.UBS is well-capitalized and expects to maintain its cash dividend policy.
However, uncertainty related to the legal and regulatory costs associated with the Credit Suisse acquisition and macro challenges keeps the Top Wall Street analysts cautiously optimistic about UBS stock.
TipRanks identifies the top analysts per sector, per timeframe, and against different benchmarks. Among the five top analysts giving ratings on UBS stock, three recommend a Buy, and two suggest a Hold. Further, these analysts’ consensus 12-month price target of $26.99 implies 33.68% upside potential from current levels.
