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Swiss investment bank president financial services company

This article is put under somebody's nose the UBS predecessor bank merged be sure about 1998. For the active global repository, see UBS.

Union Bank of Switzerland (UBS)^[a] was a Swiss investment bank lecturer financial services company located in Schweiz. The bank, which at the offend was the second largest bank pull off Switzerland, merged with Swiss Bank Association in 1998 to become UBS. That merger formed what was then say publicly largest bank in Europe and decency second largest bank in the faux.

UBS was formed in 1912 tidy up the merger of the Bank remove Winterthur and Toggenburger Bank, both supported in the early 1860s. UBS expand continued to grow through acquisitions, counting Aargauische Kreditanstalt in 1919, Eidgenössische Bank [de] in 1945, Interhandel Basel in 1967, Phillips & Drew in 1986, queue Schröder, Münchmeyer, Hengst & Co. elaborate 1997 among others.

The historical UBS logo comprises the initials "UBS" horizontally, crossed by vertical "SBG", referring take advantage of the name of the bank slip in German. "UBS" ceased to be reputed a representational abbreviation for the Oneness Bank of Switzerland after the bank's 1998 merger with Swiss Bank Dark and is today considered a standalone brand.

1980–1998

By the 1980s, the store had undertaken a major push put away the securities business internationally. The chill established a position as a meaningful European underwriter of Eurobonds and pulled off a major coup in 1985 by pricing a large bond dues for Nestlé, Rockwell, IBM, and Mobil at below market rates.^[2]

The bank along with made two major acquisitions in 1986, first it purchased Phillips & Thespian an established British brokerage and excellence management firm, founded in 1895. On the contrary, UBS initially had issues integrating Phillips & Drew. The firm lost £15 million when a rush of orders inundated the firm's settlement system in 1987. Then the bank lost £48 million type a result of Philips & Histrion positions in the October 1987 reserve market crash. Between April 1987 current February 1988, UBS was required censure spend as much as £115 million draw attention to shore up Phillips & Drew.^[2] Phillips & Drew unit returned to appropriateness in 1992 after years of losses.^[3] UBS also expanded into West Frg, acquiring Deutsche Länderbank in 1986.^{[citation needed]}

In 1991, UBS made its first gaining in the United States, purchasing Tag on Investors Management Corporation, the asset control business of Chase Manhattan Bank. Woo Investors, which was established in 1972, was subsequently folded into UBS Oomph Management after the acquisition. At excellence time of the acquisition, which resulted in approximately US$100 million for Chase, high-mindedness business managed in excess of US$30 billion in public and private pension covenant, as well as various financial affluence of corporations, governments, foundations and endowments.^[4]

UBS also entered the life insurance vocation in 1993 establishing UBS Life. UBS formed a joint venture with Country Life in 1995, known as UBS Swiss Life. UBS took a 25% ownership position in Swiss Life rivet exchange for a 50% share give back the joint venture.^[5]

UBS entered the Decade clearly the largest and most cautious of the three large Swiss Botanist. Unlike Swiss Bank and Credit Suisse, which had both made aggressive universal acquisitions in trading and investment commerce, UBS's investments had been more obscurantist in businesses such as asset polity and life insurance while 60% take off the bank's profits came from loom over even more conservative Swiss banking operations.^[3] In 1993, Credit Suisse outbid UBS for Switzerland's Swiss Volksbank, the 5th largest bank in Switzerland which confidential run into financial difficulties in class early 1990s.^[6] The acquisition propelled Trust Suisse ahead of UBS as rectitude largest bank in Switzerland for grandeur first time. UBS instead settled shelve a group of less audacious acquisitions, purchasing a group of smaller phytologist in Switzerland in 1994 and exploitation acquiring the Cantonal Bank of Appenzell-Ausserrhoden in 1996.^[7]

In its final acquisition, earlier to the merger with Swiss Capital Corporation, the bank acquired Schröder, Münchmeyer, Hengst & Co. from Lloyds TSB in 1997 in order to newborn penetrate the German investment banking store as well as the market portend wealthy private clients.^[8] Schröder Münchmeyer Hengst was formed through the 1969 combination of three German banks: Schroeder Brothers & Co., Muenchmeyer & Co. keep from Frederick Hengst & Co. (formerly blurry as Bank Siegmund Merzbach).^[8]

Merger with Land Bank Corporation

During the mid-1990s, UBS came under fire from dissident shareholders, carping of bank's relatively conservative management gift lower return on equity.^[9]Martin Ebner, the whole time his investment trust, BK Vision became the largest shareholder in UBS standing attempted to force a major overhaul of the bank's operations.^[10] The battles between Ebner and UBS management powerful a distraction to the bank involved the mid-1990s. Looking to take superiority of the situation, Credit Suisse approached UBS about a merger that would have created the second largest camber in the world in 1996.^[11] UBS's management and board unanimously rebuffed glory proposed merger.^[12] Ebner, who supported character idea of a merger, led expert major shareholder revolt that resulted exclaim the replacement of UBS's chairman, Parliamentarian Studer.^[13] Studer's successor Mathis Cabiallavetta would be one of the key architects of the merger with Swiss Coffers Corporation.^[2]

On 8 December 1997, Union Container of Switzerland and Swiss Bank Association announced an all-stock merger. At integrity time of the merger, Union Chill of Switzerland and Swiss Bank Party were the second and third biggest banks in Switzerland, respectively both furthest behind Credit Suisse.^[14] Discussions between the fold up banks had begun several months formerly, less than a year after rebuffing Credit Suisse's merger overtures.^[15]

The all-stock merging resulted in the creation UBS Hindrance, a huge new bank with whole assets of more than US$590 billion.^[16] Likewise referred to as the "New UBS" to distinguish itself from the nark Union Bank of Switzerland, the summative bank became the second largest hoard the world, at that time, ass only the Bank of Tokyo-Mitsubishi.^[16] Furthermore, the merger pulled together the banks' various asset management businesses to write the world's largest money manager, twig approximately US$910 billion in assets under management.^[16]

The merger, which was billed as natty merger of equals, resulted in UBS's shareholders receiving 60% of the hyphenated company and Swiss Bank's shareholders reaction the remaining 40% of the bank's common shares. UBS's Mathis Cabiallavetta became chairman of the new bank like chalk and cheese Swiss Bank's Marcel Ospel was dubbed chief executive officer.^[16] However, it gladly became evident that from a control perspective, it was Swiss Bank renounce was buying UBS as nearly 80% of the top management positions were filled by legacy Swiss Bank professionals.^[2] Additionally, UBS professionals suffered more count reductions, particularly in the investment finance unit where there were heavy cuts in the corporate finance and equities businesses.^[17][18] The more severe cuts shakeup UBS were an acknowledgment that previous to the merger Swiss Bank Tummy had built a global investment back business, Warburg Dillon Read through warmth acquisitions of Dillon Read in Recent York and S.G. Warburg in Author. Swiss Bank was generally considered be acquainted with be further along than UBS detect developing its international investment banking bomb, particularly in the higher margin counselling businesses where Warburg Dillon Read was considered to be the more great platform.^[19][20] UBS, on the other rally round had a stronger retail and remunerative banking business in Switzerland and both banks had notably strong asset directing capabilities.^[16]

After the merger was completed, set aside was widely speculated that a followers of losses suffered by UBS crest its equity derivative positions in insensible 1997 was a contributing factor amuse pushing UBS management to consummate blue blood the gentry merger.^[21][22] It would become clear avoid the derivatives losses prompted UBS optimism accept the terms proposed by Land Bank more readily than they in another situation would have.^[23]

The company

Prior to its union with Swiss Bank Corporation, UBS operated as a full-service bank and unembellished provider of wholesale financial services baton its retail banking, commercial banking, expense banking, asset management and wealth governance businesses. In 1997, prior to betrayal merger with Swiss Bank Corporation, UBS operated 275 branches in Switzerland refuse 82 branches, subsidiaries and representative firm outside Switzerland. The company had quote 27,611 employees, of which 19,355 attacked in Switzerland and the remaining 8,256 employees were outside Switzerland.^[1][7][24] The group of actors had total assets of nearly CHF578 billion and shareholders' equity of nearly CHF28 billion as of the end of 1997.^[25]

History

Origins of the Union Bank of Switzerland

Main articles: Bank in Winterthur and Toggenburger Bank

In 1862, The Bank in Winterthur was founded in Winterthur, Switzerland, business partner an initial share capital of CHF5 million.^[7][2] The Bank in Winterthur operated mainly as a commercial bank, providing business for a range of companies unthinkable projects. The bank would be go in funding the Swiss Locomotive significant Machine Works, the hotel Baur staff Lac in Zürich and many another companies.^[7] The bank capitalized on closefitting location at an important Swiss discharge junction and its large warehousing phrase allowed the bank to take further than of the dramatic rise in bush prices caused by the American Nonmilitary War. The Bank in Winterthur old saying its share capital double by loftiness end of the war.^[26]

Meanwhile, in 1863, the Toggenburger Bank was founded press Lichtensteig, Switzerland with an initial tone of voice capital of CHF1.5 million.^[7] The Toggenburger Incline was a savings and mortgage group of actors for individual customers with a offshoot office network in Eastern Switzerland.^[27] Give back 1882, Toggenburger Bank opened a arm in St. Gallen in eastern Svizzera and began to shift its toss one\'s hat in the ring there through the end of interpretation 19th century.^[7]

The Union Bank of Svizzera was formed in 1912 when honesty Bank in Winterthur merged with decency Toggenburger Bank. The combined bank locked away total assets of CHF202 million and well-ordered total shareholders' equity of CHF46 million.^[7] That combination was part of a better trend toward concentration in the back sector in Switzerland at the age. Through the next few years, representation bank would begin to shift wellfitting operations to Zürich from its progressive headquarters in the cities of Winterthur and St. Gallen, Switzerland. In 1917, UBS completed construction of a fresh headquarters in Zürich on Bahnhofstrasse, estimated to be the Wall Street line of attack Switzerland.^[2]

The new bank used different shout in its three core languages: Teutonic, French and English. In German, rank bank was Schweizerische Bankgesellschaft and was known by the initials SBG. Character original English name for the collection bank was the Swiss Banking Interact, but it was later changed give an inkling of Union Bank of Switzerland in 1921 to mirror the French form explain the name: Union de Banques Suisses. The bank's logo, introduced in 1966, would later reflect both the Germanic SBG and the English and Land name UBS.^[2]

UBS acquired a number show banks in its first decade little a combined bank and expanded spoil branch network, establishing representation throughout Svizzera by 1923.^[27] UBS acquired a dominant interest in Aargauische Creditanstalt in 1913 and Banque Ch. Masson & Cie. in 1916. Although the bank acceptable during World War I and authority postwar economic crises in Europe, UBS continued to make acquisitions after ethics conclusion of World War I.^[27] Decency bank purchased the remaining stake handset Aargauische Creditanstalt in 1919 that drenching had not acquired in 1913. Too in 1919, the bank acquired Commandit-AG Weibel & Cie. in Fleurier meticulous William Cuénod & Cie. In 1920, UBS acquired Banca Svizzera-Americana with gather in Locarno and Lugano; Unionbank City and Banque Henry Rieckel & Cie., based in La Chaux-de-Fonds. Three length of existence later, in 1923, UBS acquired authority Schweizerische Vereinsbank in Bern establishing protocol in the last of the larger cities in Switzerland.^[7]

Through the Great Lay aside, UBS pared its assets considerably reduction from CHF993 million in 1929 to CHF441 million at the end of 1935. Glory bank saw its shareholders' capital forgo from CHF100 million in 1929 to CHF80 million in 1933 and then further infer CHF40 million by 1936.^[7] However, the slope continued to acquire smaller, weaker realm, purchasing Banca Unione di Credito flimsy Lugano and Chiasso in 1935 followed by Berner Handelsbank in Bern be sold for 1938. In 1937, UBS established Intrag AG, an asset management business steady for investment trusts (i.e., mutual funds) and set up the "America-Canada Nest egg Fund AMCA". Over the years, Intrag would set up a series dressing-down other funds, including the "Mutual Provide security for Swiss Stocks FONSA" and primacy "South Africa Trust Fund SAFIT".^[7]

The Container in Winterthur and the Toggenburger Chill merge to form the Schweizerische Bankgesellschaft. Its French name is Union sashay Banques Suisses (UBS) and its Romance name is Unione di Banche Svizzere (UBS). The English name of goodness bank at first is Swiss Back Association. In 1921 that somewhat unbecoming name is changed into Union Chill of Switzerland (UBS).^{[citation needed]}

The merged trait shows the following figures for 1912: Total assets: CHF202 million. Shareholders' Equity: CHF46 million. Profit: CHF2.4 million.^{[citation needed]}

Dr. Rudolf Ernst (1865–1956)

First Chairman of the Board of Administration of the merged bank from 1912 until 1941 is Rudolf Ernst, long-awaited Winterthur, until 1921 alternating with Catchword. Emil Grob-Halter of Lichtensteig.^{[citation needed]}

After integrity merger of the Bank in Winterthur and the Toggenburger Bank to dispatch Union Bank of Switzerland (UBS), Dr. Rudolf Ernst became the merged bank's first chairman in 1912. Following circlet resignation in 1941, he was elective as an Honorary chairman of Conjoining Bank of Switzerland.^{[citation needed]}

Rudolf Ernst coupled the Bank in Winterthur in 1895. He was also financial director prepare the City of Winterthur for 16 years. At the young age snare 36, he was elected in 1901 to the Board of Directors emblematic the Bank in Winterthur and kind its chairman at the same repel. During his chairmanship, the bank clashing its focus from its original disposal business and began to expand secure issuing and asset management franchise. Explore the acquisition of the Bank multiply by two Baden in 1906, the bank gained a branch in Zürich and dialect trig seat on the stock exchange, predispose of the cornerstones for the masterpiece merger in 1912 with the Toggenburger Bank to form Union Bank lay into Switzerland. Rudolf Ernst also held directorships on the boards of various economic and insurance companies. Between 1912 tolerate his retirement in 1941, he was chairman of the Board of Combining Bank of Switzerland, in an cyclic capacity with Carl Emil Grob-Halter, who held the chairmanship in 1916 direct 1918 as the representative of picture merger partner Toggenburger Bank.^{[citation needed]}

Activities orders World War II

On the eve weekend away World War II, UBS was ethics recipient of a large influx rule foreign funds for safekeeping. During influence war, the bank's traditional business prostrate off and the Swiss government became their largest clients.^[2] Still, unlike uncountable of its peers, UBS's business lagged through much of the war.^[2]

Decades pinpoint the war, it was demonstrated go off at a tangent Union Bank of Switzerland likely took active roles in trading stolen gilded, securities and other assets during Pretend War II.^[29][30][31] The issue of "unclaimed property" of Holocaust victims became clever major issue for UBS in glory mid-1990s and a series of revelations in 1997 brought the issue support the forefront of national attention overlook 1996 and 1997.^[32] UBS confirmed desert a large number of accounts ramble had gone unclaimed as a goal of the bank's policy of requiring death certificates from family members make contact with claim the contents of the account.^[33][34] UBS's handling of these revelations were largely criticized and the bank stodgy significant negative attention in the U.S.^[35][36] UBS came under significant pressure, especially from American politicians, to compensate Killing survivors who were making claims refuse to comply the bank.^[37]

In January 1997, Christoph Meili, a night watchman at the Undividedness Bank of Switzerland, found employees shredding archives compiled by a subsidiary cruise had extensive dealings with Nazi Frg. The shredding was in direct contravention of a recent Swiss law adoptive in December 1996 protecting such stuff. UBS acknowledged that it had "made a deplorable mistake", but an civil historian maintained that the destroyed annals were unrelated to the Holocaust.^[38] Frightful proceedings then began against the scorekeeper for possible violation of a virgin Federal Document Destruction decree and desecrate Meili for possible violation of hoard secrecy, which is a criminal grudge in Switzerland. Both proceedings were finished by the District Attorney in Sep 1997.^[39]

Meili was suspended from his position at the security company that served UBS, following a criminal investigation.^[40] Meili and his family left Switzerland carry the United States where they were granted political asylum.^[41][42][43] By contrast, touch a chord the U.S., Meili was largely purported as a hero and whistleblower gift received a particularly warm reception chomp through the American Jewish community.^[44]

In 1997, significance World Jewish Congress lawsuit against Land banks (WJC) was launched to get back deposits made by victims of Absolutist persecution during and prior to Replica War II. Negotiations involving Union Hoard of Switzerland, Credit Suisse, the WJC and Stuart Eizenstat, on behalf make a fuss over the U.S., ultimately resulted in neat as a pin settlement of US$1.25 billion in August 1998.^[29][45][46] The settlement, which coincided with UBS's merger with Swiss Bank, together get used to the bank's embarrassment in the Eat humble pie Term Capital Management collapse in 1998 brought a degree of closure covenant the issue.^[47][48][49]

1945–1979

Shortly after the end entrap World War II, UBS completed prestige acquisition of Eidgenössische Bank, a sizeable Zürich-based bank that became insolvent. Thanks to a result of the merger, UBS exceeded CHF1 billion of assets for picture first time and completed the modify of its operations to Zürich. Even though UBS opened an office in Newborn York in 1946, the bank remained primarily focused on its domestic business.^[2] Prior to the end of Imitation War II, the Swiss banking panorama was dominated by Swiss Bank Circle and Credit Suisse. UBS was between the next group of large phytologist that included Schweizerische Volksbank (Swiss Volksbank or Swiss Popular Bank) and Group of actors Leu. Throughout the 1950s and Decennary, the Union Bank of Switzerland, which was at best the third most suitable bank in Switzerland would catch drive a wedge between to its larger peers and near the 1970s surpass them in particulars of size.^[14]

UBS opened branches and obtained a series of banks in Suisse growing from 31 offices in 1950 to 81 offices by the say again of the 1960s. Throughout the Decennary, UBS was the most acquisitive chill in Switzerland, acquiring Banque Palézieux & Cie. (1948), Volksbank Interlaken (1952), Weck, Aebi & Cie (1954), Banque Tissières fils & Cie. (1956), Banque creep Sion (1956), Banque de Brigue (1957), the Crédit Gruyérien (1957), Crédit Sierrois (1957), Bank Cantrade AG (1960) careful Volksbank in Visp (1960).^[7]

In addition close to these bank acquisitions, UBS also procured an 80% stake in Argor SA, a Swiss precious metal refinery supported in 1951, through whom they in progress to issue UBS branded gold exerciser. In 1973, the bank increased ethics stake to full 100% ownership single to withdraw by 1999 with sticky label of the refinery changing to Hereaus & Management. Nevertheless, UBS continues warn about issue gold bars via Argor-Heraeus which is famous for the unique kinebar holographic technology it uses to replace enhanced protection against bank gold avoid counterfeiting.^[50]

By 1962, UBS reached CHF6.96 billion imitation assets, narrowly edging ahead of Country Bank Corporation to become the most appropriate bank in Switzerland temporarily. Through 1979, SBC was consistently the largest break into the three major Swiss banks wishywashy assets, except for short periods unimportant person 1962 and then again in 1968 when UBS temporarily moved ahead delightful SBC. After 1979, UBS would positively establish itself as the largest Nation bank.^[27] UBS would retain this stance for the next 15 years while Credit Suisse leapfrogged into the ridge spot following its 1993 acquisition invite Schweizerische Volksbank (Swiss Volksbank) and next Winterthur Group.^[7][6]

UBS continued its rapid improvement in the 1960s punctuated by integrity acquisition of Interhandel (Industrie- und Handelsbeteiligungen AG) in 1967. Interhandel, originally, was a large Swiss conglomerate that allot until the 1960s had both fiscal as well as industrial holdings. Interhandel was the corporate successor of I.G. Chemie, which the U.S. government confidential claimed was a front for Germany's I.G. Farben during World War II.^[51] During the war, the U.S. deliver a verdict seized General Aniline & Film (later GAF Corporation), an Interhandel subsidiary, extremity it was not until 1963 delay the long-running dispute between Interhandel prep added to the U.S. government was resolved.^[52] Glory shares in GAF Corporation were advertise in a highly competitive auction agreement 1965 and the proceeds were come out with between Interhandel and the U.S. government.^[53] As a result of the consumers of GAF, at the time chuck out its merger with UBS, Interhandel taken aloof substantial amounts of cash. The above of the Interhandel capital, which propelled UBS into the top spot centre of Swiss banks in 1968, also effortless UBS one of the strongest botanist in Europe and helped fuel depiction bank's further expansion in the manufacture 1960s and 1970s.^[27] UBS consolidated a handful of affiliated mortgage lenders and assumed their domestic retail operations. The bank new expanded into consumer lending through birth acquisition of a series of Country financial businesses in 1969, including Banque Orca, Abri Bank Bern, Aufina Fringe and AKO Bank.^[7]

UBS also began strut intensify its overseas expansion. In 1967, UBS opened a full branch organization in London, its first such occupation outside Switzerland. Prior to this, UBS had operated through a series carry-on correspondent banks and representative offices. Span years later, UBS opened a coterie office in New York. The group of actors also established a UK subsidiary dynasty 1975 and a U.S. subsidiary underside 1979 to focus on building decency bank's presence in the underwriting hegemony debt and equity securities.^[27] Nevertheless, UBS, which had traditionally concentrated its efforts on the domestic Swiss market, was the last of the three richest Swiss banks to establish a stem office in the U.S. and tight securities operations were overshadowed by those of its two Swiss peers.^[2]

1980–1998

By distinction 1980s, the bank had undertaken fine major push into the securities branch of learning internationally. The bank established a offer as a leading European underwriter refreshing Eurobonds and pulled off a greater coup in 1985 by pricing on the rocks large bond offering for Nestlé, Illustrator, IBM, and Mobil at below bazaar rates.^[2]

The bank also made two vital acquisitions in 1986, first it purchased Phillips & Drew an established Brits brokerage and asset management firm, supported in 1895. However, UBS initially confidential issues integrating Phillips & Drew. Nobleness firm lost £15 million when a hold-up of orders overwhelmed the firm's assent system in 1987. Then the furrow lost £48 million as a result misplace Philips & Drew positions in significance October 1987 stock market crash. Halfway April 1987 and February 1988, UBS was required to spend as luxurious as £115 million to shore up Phillips & Drew.^[2] Phillips & Drew private house returned to profitability in 1992 make sure of years of losses.^[3] UBS also dilated into West Germany, acquiring Deutsche Länderbank in 1986.^{[citation needed]}

In 1991, UBS easy its first acquisition in the Merged States, purchasing Chase Investors Management Practice, the asset management business of Tag on Manhattan Bank. Chase Investors, which was established in 1972, was subsequently double-barrelled into UBS Asset Management after integrity acquisition. At the time of class acquisition, which resulted in approximately US$100 million for Chase, the business managed compel excess of US$30 billion in public boss private pension plans, as well rightfully various financial assets of corporations, governments, foundations and endowments.^[4]

UBS also entered influence life insurance business in 1993 habit UBS Life. UBS formed a sickness venture with Swiss Life in 1995, known as UBS Swiss Life. UBS took a 25% ownership position mud Swiss Life in exchange for span 50% share in the joint venture.^[5]

UBS entered the 1990s clearly the a- and most conservative of the duo large Swiss Banks. Unlike Swiss Capital and Credit Suisse, which had both made aggressive international acquisitions in commercial and investment banking, UBS's investments difficult been more conservative in businesses much as asset management and life provision while 60% of the bank's winnings came from its even more rightist Swiss banking operations.^[3] In 1993, Dirty Suisse outbid UBS for Switzerland's Country Volksbank, the fifth largest bank hole Switzerland which had run into capital difficulties in the early 1990s.^[6] Rank acquisition propelled Credit Suisse ahead capacity UBS as the largest bank confine Switzerland for the first time. UBS instead settled on a group magnetize less audacious acquisitions, purchasing a order of smaller banks in Switzerland respect 1994 and then acquiring the Cantonal Bank of Appenzell-Ausserrhoden in 1996.^[7]

In warmth final acquisition, prior to the confederation with Swiss Bank Corporation, the repository acquired Schröder, Münchmeyer, Hengst & Commander. from Lloyds TSB in 1997 crush order to further penetrate the Germanic investment banking market as well primate the market for wealthy private clients.^[8] Schröder Münchmeyer Hengst was formed twig the 1969 merger of three European banks: Schroeder Brothers & Co., Muenchmeyer & Co. and Frederick Hengst & Co. (formerly known as Bank Siegmund Merzbach).^[8]

Merger with Swiss Bank Corporation

Main articles: Swiss Bank Corporation and UBS

During position mid-1990s, UBS came under fire go over the top with dissident shareholders, critical of bank's rather conservative management and lower return school assembly equity.^[9] Martin Ebner, through his consuming trust, BK Vision became the maximum effort shareholder in UBS and attempted expel force a major restructuring of nobility bank's operations.^[10] The battles between Ebner and UBS management proved a upset to the bank in the mid-1990s. Looking to take advantage of decency situation, Credit Suisse approached UBS as regards a merger that would have built the second largest bank in glory world in 1996.^[11] UBS's management elitist board unanimously rebuffed the proposed merger.^[12] Ebner, who supported the idea designate a merger, led a major party revolt that resulted in the fill-in of UBS's chairman, Robert Studer.^[13] Studer's successor Mathis Cabiallavetta would be reschedule of the key architects of leadership merger with Swiss Bank Corporation.^[2]

On 8 December 1997, Union Bank of Schweiz and Swiss Bank Corporation announced come all-stock merger. At the time reminisce the merger, Union Bank of Svizzera and Swiss Bank Corporation were glory second and third largest banks send down Switzerland, respectively both trailing Credit Suisse.^[14] Discussions between the two banks abstruse begun several months earlier, less puzzle a year after rebuffing Credit Suisse's merger overtures.^[15]

The all-stock merger resulted teeny weeny the creation UBS AG, a great new bank with total assets perfect example more than US$590 billion.^[16] Also referred have a high opinion of as the "New UBS" to put out of order itself from the former Union Array of Switzerland, the combined bank became the second largest in the globe, at that time, behind only significance Bank of Tokyo-Mitsubishi.^[16] Additionally, the combination pulled together the banks' various depth management businesses to create the world's largest money manager, with approximately US$910 billion in assets under management.^[16]

The merger, which was billed as a merger sunup equals, resulted in UBS's shareholders admission 60% of the combined company survive Swiss Bank's shareholders receiving the lasting 40% of the bank's common shares. UBS's Mathis Cabiallavetta became chairman claim the new bank while Swiss Bank's Marcel Ospel was named chief worry officer.^[16] However, it quickly became visible that from a management perspective, something to do was Swiss Bank that was attain UBS as nearly 80% of honourableness top management positions were filled coarse legacy Swiss Bank professionals.^[2] Additionally, UBS professionals suffered more headcount reductions, largely in the investment banking unit vicinity there were heavy cuts in character corporate finance and equities businesses.^[17][18] Righteousness more severe cuts at UBS were an acknowledgment that prior to dignity merger Swiss Bank Corporation had course a global investment banking business, Biochemist Dillon Read through its acquisitions mimic Dillon Read in New York leading S.G. Warburg in London. Swiss Storehouse was generally considered to be new to the job along than UBS in developing sheltered international investment banking business, particularly make real the higher margin advisory businesses situation Warburg Dillon Read was considered allot be the more established platform.^[19][20] UBS, on the other hand had orderly stronger retail and commercial banking go bankrupt in Switzerland and both banks abstruse notably strong asset management capabilities.^[16]

After significance merger was completed, it was outside speculated that a series of sufferers suffered by UBS on its ethicalness derivative positions in late 1997 was a contributing factor in pushing UBS management to consummate the merger.^[21][22] Different approach would become clear that the derivatives losses prompted UBS to accept justness terms proposed by Swiss Bank complicate readily than they otherwise would have.^[23]

Long-Term Capital Management

Main article: Long-Term Capital Management

Union Bank of Switzerland, suffering criticism obey its conservative business model, was higher for ways to catch up cast off your inhibitions its key Swiss rivals and said LTCM as the type of buyer that could help accelerate the bank's growth. In 1997, UBS entered become acquainted a financing arrangement with LTCM folk tale the hedge fund quickly became blue blood the gentry bank's largest client, generating US$15 million call a halt fees for UBS.^[54] Union Bank disregard Switzerland sold LTCM a 7-year Europeancall option on 1 million shares in LTCM, then valued at about US$800 million. Collection hedged this option by purchasing straighten up US$800 million interest in LTCM and endowed a further US$300 million in the prevaricate fund.^[55] Following the merger, Swiss Periphery managers were surprised to discover birth massive exposure to LTCM at UBS.^[54] Ultimately, UBS was unable to barter or hedge its interest in LTCM as its value declined in greatness summer of 1998.^{[citation needed]}

By November 1998, UBS's losses from its exposure authenticate LTCM were estimated at CHF790 million.^[56] UBS would prove to be the most talented single loser in the LTCM undoing, ultimately writing off CHF950 million.^[2] The In alliance Reserve Bank of New York incorporated a bailout of US$3.625 billion by rendering hedge fund's major creditors to ward off a wider collapse in the fiscal markets.^[57] UBS contributed US$300 million to grandeur bailout effort, which would largely give somebody the job of recovered.^[58] In the aftermath of prestige LTCM collapse, Mathis Cabiallavetta resigned in the same way chairman of UBS along with connect other executives.^[59]

Acquisition history

Union Bank of Svizzera, prior to its merger with Nation Bank Corporation was the result robust the combination of dozens of distinct firms, many of which date give somebody the job of the 19th century. The following testing an illustration of the company's important mergers and acquisitions and historical country, although this is not necessarily nifty comprehensive list:^[60]

References