Both companies operate a branch in Korea
Discussion on the possible merger of the Korean branch due to the acquisition of CS by UBS
The key is the relocation of Incapacity Benefit personnel
Notification of changes in the domestic IB workforce market in line with UBS’s global strategy
With UBS announcing that it will acquire Credit Suisse (CS), attention is now focused on how to reorganize its global business organization. Since both companies conduct business in Korea, attention is also focused on the integration of the Korean branch. As a result, it is seen that large-scale personnel movement in the domestic IB industry may occur.
On the 19th local time, the Swiss National Bank said, “The Swiss Financial Market Supervisory Authority has almost approved the merger of the two banks.” The transaction will be conducted in such a way that CS shareholders receive one UBS share for every 22.48 shares. Regarding the deal, UBS Chairman Kom Kelleher said, “It is an emergency rescue for CS shareholders and an attractive deal for UBS shareholders.”
The merger between the two companies is expected to change the global business as well. The agreement is expected to close by the end of this year. UBS announced its policy to focus on strengthening global banking operations based on wealth management (WM). The plan is to strengthen the WM business in the US and Asia, but as CS has already withdrawn from the WM business in the US, business expansion is expected to focus on UBS. It is seen that in regions other than the United States, it will begin to strengthen its business by absorbing the WM CS division.
The IB sector is the key. As CS grows its business focused on IB work, attention is focused on how UBS will reorganize the business. CS had been working on the ‘CS First Boston’ project to spin off the IB division even before it was bought by UBS. However, with the acquisition of CS by UBS, it also became difficult to predict the future of the transaction.
The possibility of restructuring the Korean branch of CS was also discussed depending on whether it was spun off, but even this has become unknown at this time. The UK’s Financial Times reported that the IB CS division may be revised or cancelled. In addition, UBS Chairman Kom Kelleher said that “the IB business can be reduced.”
In Korea, it is expected that UBS will be affected by the way it reorganizes the IB sector. UBS withdrew its banking sector from Korea in 2016 and is doing a securities-focused business. In 2017, he put a lot of effort into the work of IB, such as recruiting CEO Lim Byeong-il from CS, but after Lim left for Samsung, the position of representative of the Korean branch is still vacant.
On the other hand, CS is developing its domestic IB-focused business. According to the Korea Financial Investment Association, the number of CS personnel in the securities sector was 98 at the end of last year, twice as many as UBS (58). In terms of net profit, CS also reached KRW 68.2 billion, three times higher than UBS (KRW 21.8 billion). Most of CS’s revenue comes from IB work. According to data released by Invest Chosun, CS was second last year in the M&A league table, showing a significant gap with UBS, which was ranked 10th.
In that sense, if UBS takes the IB CS business as it is, it will most likely be reorganized around the CS workforce. CS has excellent IB bankers, and is ahead of UBS in terms of objective figures and reputation. However, if UBS plans to reduce IB’s work in Korea as well, a large-scale relocation of its personnel is inevitable.
Considering that global IBs such as Goldman Sachs, JP Morgan, and Morgan Stanley are already grappling with the issue of succession in Korea, the move from CS is very likely to lead to a major change in the IB workforce market.
An IB industry official said, “With the acquisition of CS by UBS, a merger between UBS and CS’s Korean arm is expected.” It will be inevitable,” he said.
Invest Chosun Paid Service Published at 07:00 on March 22, 2023