Credit Suisse and UBS, two major Swiss banks, announced a merger agreement on Sunday, March 19, 2023.
UBS will acquire all of Credit Suisse's shares for CHF 3 billion, or approximately Rp49.6 trillion (at an exchange rate of Rp16,535 per CHF).
"If possible, the merger process is expected to be completed by the end of 2023," Credit Suisse management said in a press release on Sunday, March 19, 2023.
This merger agreement was announced after Credit Suisse's finances deteriorated.
According to its annual report, in 2021 Credit Suisse's assets under management (AUM) were still CHF 1.6 trillion. However, by the end of 2022, this figure had fallen to CHF 1.29 trillion.
This means that during the 2021-2022 period, Credit Suisse's AUM decreased by CHF 320.4 billion, or approximately Rp5,297.8 trillion.
AUM is the market value of all investor assets managed by a financial institution. A high AUM value indicates that a financial institution is trusted by many investors, and vice versa.
Credit Suisse's AUM plummeted in 2022 because many investors withdrew their funds from the bank.
"Since the beginning of the fourth quarter of 2022, Credit Suisse has experienced significantly higher withdrawals than cash deposits, the non-renewal of maturing time deposits, and large net assets outflows," Credit Suisse management stated in its report (March 14, 2023).
"This decline in AUM is expected to lead to a decrease in net interest income and reduced commissions for the corporate group," it continued.
The decrease in AUM also indicates a weakening of Credit Suisse's liquidity.
"Our liquidity position could be affected. We may not be able to meet withdrawal requests on demand, or finance loans, investments, and new businesses," they said.