UBS, Credit Suisse marriage may not lead to Swiss bliss

By Robin Millard GENEVA, Switzerland—The

mar- riage of UBS and Credit Suisse was hastily arranged to prevent a global financial meltdown—but the size of the resulting megabank could cause domestic problems in Switzerland, the central bank admitted Thursday. The Swiss National Bank, which played matchmaker in Sunday’s takeover of Credit Suisse, said the formation of one giant bank in Switzerland would create competition issues that would need addressing carefully.

UBS was already the biggest bank in the country—and will now become even larger after swallowing up the second-most important bank in the wealthy Alpine nation, where a vibrant banking scene is central to Swiss culture.

With Credit Suisse shares in freefall last week, the Swiss government, the SNB central bank and the FINMA financial regulators strongarmed UBS into buying its stricken rival before the markets reopened on Monday.

SNB chairman Thomas Jordan said this avoided triggering a wider banking crisis around the world— though he accepted that domestic banking choice in Switzerland had taken a hit.

Future competition

“UBS will be a very big bank and competition issues will be relevant,” Jordan told reporters at the SNB headquarters in Zurich.

“We have to make sure that in the future in Switzerland there will be enough competition for providing banking services. I think this is in the interests of everybody— including UBS.”

He said FINMA and the Swiss finance ministry would have to look at dealing with the situation.

“But at this moment, I think the focus has to be ensuring that we can maintain financial stability under all circumstances.”

Behind UBS and Credit Suisse in Switzerland, only Raiffeisen and PostFinance—the financial services unit of Swiss Post—rank as domestic systemically important banks, along with the cantonal banks of the Zurich and Vaud, which have limited reach beyond those regions. Jordan insisted that Switzerland’s emblematic banking industry was in good health.

“The Swiss banking system is very resilient and robust,” he said. UBS and Credit Suisse were both among the 30 banks around the world deemed ‘too big to fail’ and therefore considered Global Systemically

Important Banks. Such banks are ranked according to their importance to the global financial system and must comply with more stringent requirements, including the level of capital they must set aside to weather a crisis.

The strictest rules apply to the US bank JPMorgan Chase, but UBS is likely to jump up in the rankings.

The Swiss authorities will have to learn to manage a bigger bank presenting greater systemic risks. Jeopardy risk

The implosion of Credit Suisse came after the collapse of two tech-lending US banks triggered fears of international contagion. Analysts considered whether Credit Suisse could have sold to a foreign bank, broken up or wound down in an orderly bankruptcy.

Alternergy said it planned to spend 35 percent of the IPO proceeds to start the construction of new projects in the next few months, including the Solana Solar Power Project in Hermosa, Bataan and the Lamut Run-of-River Hydro Project in Lamut, Ifugao.

The company will also embark on more aggressive pre-development activities for the pipeline of projects using IPO proceeds. These projects include the Ibulao Run-of-River Hydro Project, Tanay and Alabat Wind Projects and offshore wind projects.

A third of the IPO proceeds will be used to pay off liabilities in acquiring a controlling stake in the Kirahon Solar Power Project, it said. With AFP

Japan’s inflation eased in February from 4-decade high

TOKYO—Japan’s consumer prices rose 3.1 percent in February from a year earlier, slowing from the four-decade highs seen in previous months, government data showed Friday. The figure, which excludes volatile fresh food, met market expectations and comes after the government introduced relief measures for soaring energy bills.

It is the first deceleration in over a year, marking a fall from January, when prices jumped 4.2 percent onyear—the highest level since September 1981, fueled in part by higher energy bills.

UBS economist Masamichi Adachi had said ahead of the data release that he expected lower inflation in February “due to a discount on energy price with the government’s subsidies”, which were announced in October and came into effect this year.

The drop is also due in part to the comparison with data from February 2022, when prices began to rise in Japan following decades of sluggish inflation or deflation.

The 3.1 percent rise is above the Bank of Japan’s longstanding twopercent target, which has been surpassed every month since April last year.

But it remains lower than the skyhigh inflation seen in the United States and elsewhere, with central banks worldwide hiking interest rates to tackle rising prices. AFP

Toshiba to support $15-b takeover bid by investment fund

A photograph shows a logo of Swiss banking giant UBS in Zurich, on March 23, 2023.

The marriage of UBS and Credit Suisse was hastily arranged to prevent a global financial meltdown -- but the resulting megabank could cause domestic problems in Switzerland, the central bank admitted on March 23, 2023. AFP

“We were in an extremely fragile environment where we had this banking crisis in the United States and enormous nervousness in financial markets in general,” Jordan said.

He said any outcome other than the UBS takeover would not have stabilized the situation. Instead it would have created “enormous uncertainty and would then also put the Swiss financial system, including the Swiss economy, in jeopardy but not only Switzerland. It could also be then the trigger of a bigger, larger global financial crisis.”

Swissmem, the national association representing the engineering industry, voiced concern about the risks of having only one major Swiss bank with the skillset for exports, and about the repercussions on costs without an alternative to UBS. AFP

TOKYO, Japan—Troubled Japanese conglomerate Toshiba said Thursday it will “support” a $15-billion takeover bid by a consortium led by investment fund Japan Industrial Partners.

The long-awaited move follows years of turmoil for the company, which once symbolized Japan’s tech prowess but has more recently faced scandals, financial trouble and high-level resignations.

The engineering giant remained cautious in a statement issued after a board meeting, however, saying it would ask a special committee to review the deal, before recommending how its shareholders proceed.

“At this point, the board... expresses our support for the tender offer if it is commenced,” it said.

“However, the board has also passed a resolution to not go as far as to recommend it at this point.”

Toshiba, which produces everything from rice cookers to medical equipment and nuclear plants, said it would likely take four months before the takeover bid gets underway.

The JIP-led consortium includes 17 Japanese businesses and six Japanese financial institutions which are investing in or issuing loans for the deal.

When approved under global competition laws, the acquisition -- worth nearly two trillion yen ($15 billion) -- is expected to take the engineering giant private.

Nearly two years ago, a bombshell buyout offer from private equity fund CVC Capital Partners put a question mark over the future for Toshiba.

The ensuing saga has been closely watched in business circles for clues on what could become of other huge, diversified conglomerates in Japan and elsewhere.

After the CVC offer was dropped, plans were floated to split the company up and spin off its device segment -- meeting stiff opposition from some investors.

Several shareholders argued that a spin-off would only add to Toshiba’s woes by creating more managerial posts at smaller units, rather than improving the firm’s governance.

But that plan was rejected last year at an extraordinary shareholder meeting, dealing a blow to management as deadlock reigned over the next steps for the company. AFP