The upheaval surrounding the Credit Suisse rescue continues to ripple through European markets. In Spain, the bank faces a period of uncertainty following UBS’s 3,000 million dollar acquisition, backed by the Swiss government and the central bank with an additional 100,000 million Swiss francs to stabilize the process. Earlier, UBS divested its private banking arm in Spain to Singular Bank, a wealth management specialist owned by Warburg Pincus. That deal carried a three-year non-compete clause preventing UBS from running private banking activities in Spain, and several UBS bankers moved to Singular Bank in the wake of the transfer.
Such non-compete provisions are common in cross-border acquisitions, and UBS must decide how to manage its Credit Suisse arm in Spain going forward. Potential options include winding down the operation or selling it to another buyer. The scenario resembles a similar situation observed in Austria. A deal that brought Singular Bank into the mix involved around 200 million euros and united a team of 400 professionals across 11 offices. Sources have not revealed UBS’s final strategy for its newly acquired Spanish operation. Still, the arrangement appears to be particularly protective of Singular Bank’s interests.
In Spain, Credit Suisse operates through three main business lines. One is Credit Suisse Bank Europe, the investment banking hub that the Swiss firm used after Brexit to reach European clients and access markets on the continent. Another is the high net worth management unit centered in the Credit Suisse AG office, which coordinates work for Spanish clients. Director Credit Suisse Gestión has also been assigned to oversee this area.
Analysts from Accuracy, a financial consulting firm, indicated to Europa Press that with the Credit Suisse acquisition, it seems plausible that Singular Bank could later resell this space. Such a move would help consolidate the business model needed to boost efficiency within Spain’s private banking sector, and could stimulate corporate operations in the market.
suspension of bonuses
Across the globe, the Swiss government temporarily paused certain bonus payments for Credit Suisse staff after the state-brokered deal. Under the Swiss Banking Act, authorities reserve the right to implement remuneration measures when a systemically important bank receives direct or indirect government assistance from federal funds. This pause, though temporary, risks prompting more Credit Suisse personnel to seek opportunities elsewhere, as recruitment activity reports suggest a surge in calls to bankers seeking positions elsewhere amid the ongoing integration.
On Monday, the Credit Suisse Board of Directors decided to waive variable compensation for the 2022 fiscal year, a move reported by the government. The aim was to shield employees not responsible for the crisis from retroactive penalties. Yet executives have urged the Swiss Ministry of Finance to consider further changes to variable pay for 2022 and beyond.
‘CoCo’ emissions
Major Spanish banks Banco Santander, CaixaBank and BBVA currently carry an outstanding contingent convertible debt burden of roughly 17.8 billion euros, according to Europa Press numbers. These instruments, known as CoCos, convert to equity under certain conditions and can be redeemed if the bank’s CET1 ratio falls below threshold levels. Additional capital is treated as Tier 1 capital.
These CoCo issues have gained attention after the Swiss Financial Markets Supervisory Authority signaled that the UBS–Credit Suisse takeover would require full amortization of Credit Suisse’s CoCo debt at par value. The estimated amount involved is about 16,000 million francs (roughly 16.2 billion euros). Shareholders, meanwhile, would receive UBS stock as compensation.
Industry observers have warned that such instruments carry inherent risk for investors, as highlighted by S&P Global Ratings. The rating agency noted that the announcement surrounding these instruments during the Credit Suisse legal proceedings suggested that AT1 investors could face substantial losses in any recovery scenario. The takeaway is that this risk exists beyond the Swiss context, and it is not exclusive to Switzerland.
European and UK officials have cautioned against assuming Swiss practices automatically set European standards for banking settlements. Christine Lagarde, head of the European Central Bank, reminded lawmakers that European regulators—represented by the EBA, the ECB, and the SRB—maintain specific ranking and protection rules that should guide European responses, independent of Swiss examples.
‘CoCos’ in Spain
Similar stories have emerged across Spain where CoCos are a topic of ongoing discussion. Santander has about 7.8 billion euros in AT1 instruments, with CaixaBank and BBVA holding substantial amounts as well. Other institutions such as Sabadell, Ibercaja, Unicaja, and others have smaller allocations, reflecting a broader market trend in which AT1 debt features prominently among major banks and continues to evolve in response to regulatory signals and market conditions.