The turbulence caused by the Credit Suisse bailout has yet to subside. Their business in Spain is facing a period of uncertainty after the bank’s acquisition by UBS for $3,000 million with the support of the Swiss Government and Central Bank to contribute 100,000 million Swiss francs. Last July, UBS sold its private banking business in Spain to Singular Bank, a Spanish company specializing in wealth management and owned by Warburg Pincus. This sale required a non-compete agreement that prevented UBS from operating in the private banking business in Spain for the next three years.. At that time, many UBS bankers left the organization before joining Singular Bank.
This type of clause is common in cross-border deals and UBS will have to find a solution for its Credit Suisse subsidiary in Spain. Options considered are closing the business or selling it to a third party. A similar situation can be experienced in Austria. buy, worth 200 million eurosbrought the Singular Bank team together with 400 professionals spread across 11 offices. Sources consulted do not know what UBS’ final decision will be regarding its recently acquired Spanish business. But it’s a “pretty protective” deal for Singular Bank.
Swiss bank in Spain There are three business lines. On one side is Credit Suisse Bank Europe, the investment banking firm the Swiss firm used after Brexit to cover European clients and access markets in the Old Continent. The high net worth management business is concentrated in the Credit Suisse AG branch, where they deal with Spanish clients. Likewise, Director Credit Suisse Gestión has been appointed to this job.
“Relatively recently, Singular Bank acquired the Private Banking division of UBS, with the acquisition of Credit Suisse it seems plausible that they would resell this space; can stimulate the market for corporate operations It allows the consolidation of this business model necessary to improve efficiency,” financial consulting firm Accuracy told Europa Press this Tuesday.
suspension of bonuses
Globally, the Swiss government Temporarily suspend certain types of bonus payments for Credit Suisse staff After the acquisition of the bank negotiated by the state. The Swiss country’s administration said in a statement that under the Swiss Banking Act, it has the authority to take remuneration-related measures “if a systemically important bank receives direct or indirect government assistance from federal funds.”
Suspension of bonus payment, albeit temporarily, could cause more Credit Suisse employees to leave. Hiring managers around the world are currently receiving an unprecedented barrage of calls from Credit Suisse bankers looking for new jobs, and the company is about to be taken over by its competitor, Bloomberg reports.
Credit Suisse Board of Directors decided on Monday to waive variable compensation for fiscal year 2022, the government reported. Therefore, the Government will not retroactively prohibit “variable fees already awarded to Credit Suisse employees for fiscal year 2022 and pending immediate payment”. The purpose of this is to prevent it from affecting the employees who do not cause the crisis.” Despite this, the Executive urged the Swiss Ministry of Finance to “suggest additional measures” on variable remuneration for 2022 and beyond.
‘CoCos’ emissions
Banco Santander, CaixaBank and BBVA currently has outstanding balance of approximately 17.8 billion euros in contingent convertible debtAccording to figures compiled by Europa Press, also known as ‘CoCos’, means that they are leading these problems in the Spanish market, and together there is an extraordinary balance of around 22,000 euros. These are perpetual bonds, but they can be redeemed under certain conditions and become newly issued common stock if certain conditions are met, for example, if the bank or its consolidated group offers a CET1 equity ratio below a certain level. Additional capital is classified as ‘Tier 1’ (AT1).
These ‘CoCos’ issues, aimed exclusively at institutional investors, have gained prominence in recent days after the Swiss Financial Markets Supervisory Authority (Finma) stated that the acquisition of Credit Suisse by UBS would require the full par value of all Credit Suisse’s debt to be amortized. Suisse ‘CoCos’, The amount will be approximately 16,000 million francs. (16.185 million euros). Instead, shareholders will receive compensation in UBS shares.
This has caused some suspicion among investors of these instruments, as an analysis by S&P Global Rating shows. The firm points out that the announcement regarding these issues in the Credit Suisse lawsuit implied AT1 investors.at risk of heavy loss as part of any recovery packageeither as part of a formal solution or as part of a market solution to help a distressed bank.”
However, he emphasizes that this is possible in other countries as well.Do not automatically follow the Swiss modelAs European and UK officials pointed out last Monday. Specifically, the head of the European Central Bank (ECB), Christine Lagarde, stated that Switzerland does not set European standards in terms of settlement conditions for banking institutions.
“Switzerland does not set standards in EuropeLagarde, in his speech before the European Parliament’s Economic and Monetary Affairs Committee, reminded that “this is clearly stated in the statement made by the EBA, the ECB as the auditor and the SRB”. “The trio, EBA, ECB and SRB as supervisors, have been very specific in terms of the ranking (priority) they have applied in Europe.”
‘CoCos’ in Spain
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Featured in Spain Santander with €7,811m in these AT1 numbers, including two dollars. behind CaixaBank and BBVAclose to 5,000 euros and sabadellWith 1 billion 750 million Euros and three issuances after using the prepayment right for 400 million Euro issuance made in 2017.
behind IbercajaDespite announcing that it will redeem its 350 million Euro issuance in February 2018, which has an outstanding balance of 700 million Euros in ‘CoCos’, in April, bankerwith 650 million euros; abancawith 625 million euros; And Unicaja BankWith an issuance of 500 million Euros.