Credit Suisse, a big, beleaguered bank with a considerable shipping portfolio, is to be taken over by the UBS Group — a Swiss peer with negligible exposure to the maritime industry.
Under the terms of the transaction engineered late on Sunday by the Swiss government to ensure the viability of Credit Suisse, the two lenders will become one with UBS being the “surviving entity”, according to a Credit Suisse statement.
Credit Suisse is the biggest lender to Greek shipping with a portfolio of $5.2bn in drawn and about $400m in committed but undrawn loans as of the end of 2021, according to Petrofin Research.
The Athens-based research company estimates the bank’s total shipping loan portfolio at about $10bn, making it the world’s 10th-biggest shipping lender.
UBS’ exposure to shipping, in contrast, is much more modest.
The traditional Swiss lender appears nowhere in Petrofin’s annual list of the 62 top ship-lending banks.
According to its annual report for 2022, UBS has a $2.86bn exposure to transportation, of which just $0.2bn is in “sea-based shipping”.
Unlike Credit Suisse, UBS is also not among the 30 signatories to the Poseidon Principles — a loose alliance of banks pushing for green shipping.
In terms of shipping, UBS has made headlines as a minority shareholder in US-listed Frontline.
Several years ago, Greek shipowner Theodore Angelopoulos was believed to hold a considerable minority stake in UBS but it is unclear if he still does.
His name does not feature in any list of major UBS shareholders.
A good fit in shipping
All of this suggests that shipping is most likely an area in which the two banks do not overlap and in which they complement each other well.
The transition of Credit Suisse’s shipping portfolio to the new, bigger entity should, therefore, be expected to run smoothly.
In a statement to TradeWinds on 17 March — before its takeover by UBS was announced — Credit Suisse assured TradeWinds that it continued regarding maritime clients as a key component in its future strategy.
“Ship financing remains an integral part of our service offering and we remain committed to our shipping clients,” the Zurich-based lender said in an email.
Nothing in the statements issued subsequently by UBS, Credit Suisse and the Swiss Financial Market Supervisory Authority (FINMA) suggests that shipping could fall by the wayside in the transaction.
As a result of the liquidity assistance and default guarantees provided by the Swiss central bank, “it will be possible to continue all the business activities of both banks with no restrictions or interruptions”, FINMA said.
In a separate statement late on 19 March, Credit Suisse made the same point.
“Credit Suisse continues to operate in the ordinary course of business and implement its restructuring measures in collaboration with UBS,” it said.
If past statements by Credit Suisse are any guide, its future restructuring as part of its takeover by UBS will most likely be about paring down its investment banking and exiting complicated financial products.
In a statement issued late on Sunday, UBS confirmed it was planning to “manage down” the rest of Credit Suisse’s investment bank.
In contrast, UBS cited Credit Suisse’s “capabilities in wealth, asset management and Swiss universal banking” as being among the main points that attracted it to the deal.
This is good news for shipping because Credit Suisse’s wealth management and maritime businesses have been inextricably linked.
Credit Suisse’s traditional business model has been to offer loans to shipping clients in exchange for private investments in the bank’s wealth and asset management unit.
Credit Suisse staff handling that business can reasonably expect to be able to keep their jobs under new management.
“UBS has expressed its confidence that the employment of the staff of Credit Suisse will be continued,” Credit Suisse said on Sunday.
On the other hand, the managers handling these accounts may be headed by new department bosses soon.
UBS said late on Sunday that it will appoint “key personnel” with Credit Suisse “as soon as legally possible” in order to ensure “a seamless integration” of the two lenders.
UBS chairman Colm Kelleher and the bank’s chief executive Ralph Hamers will maintain their positions in the new combined entity.
