UBS selects Oliver Wyman to oversee Credit Suisse integration

21 April 2023 5 min. read

Multinational investment bank UBS has hired Oliver Wyman to guide the integration of Credit Suisse. UBS agreed in mid-March to buy Credit Suisse for 3 billion Swiss francs ($3.35 billion) in stocks.

Interest for one of the most prestigious post-merger integration engagements in financial services was high. Over a dozen consultancies made the longlist, with reporting from Financial Times suggesting that Bain & Company, Boston Consulting Group, McKinsey & Company, and Oliver Wyman made the shortlist.

Ultimately, the smallest of the four, Oliver Wyman, has been selected to deliver the engagement.

UBS selects Oliver Wyman to oversee Credit Suisse integration

Though it is smaller than the other bidders, Oliver Wyman’s parent company Marsh McLennan, which operates several other professional services firms, actually reports revenue that exceeds those of the ‘MBB’ ($20.7 billion in 2022). Oliver Wyman, for its part, has reported strong growth in recent years and is recognized as one of the top consulting firms in the financial services industry.

Oliver Wyman will provide merger integration services, which are essential in the process of bringing together companies following a merger or acquisition. These services are designed to ensure that the newly merged entities are able to operate as effectively and efficiently as possible.

UBS chairman Colm Kelleher told reporters “this is the biggest single financial transaction since 2008,” when the global banking system went into meltdown following the collapse of so-called ‘too big to fail’ investment bank Lehman Brothers.

UBS and the consultancies involved declined to comment on the bidding and selection process to various media publications, so the exact reason for choosing Oliver Wyman is not currently known.

There is already, however, some tangential connection between UBS and Oliver Wyman. In 2019 during his time as chief executive officer of UBS, Sergio Ermotti hired Huw van Steenis as a senior advisor. Steenis later left UBS in 2022 and is currently vice chair at Oliver Wyman.

UBS recently reappointed Ermotti to the top position because he was seen as better capable of overseeing the merger than CEO Ralph Hamers, who took over the role in 2020. Ermotti’s previous term as CEO was from 2011 to 2020.

A banking giant

The massive merger of the two largest Swiss banks will result in a behemoth bank twice the size of Switzerland’s entire economy. Concentrating so much risk could mean trouble down the line for the Swiss financial sector. And in a raw deal for taxpayers: The Swiss government has provided UBS with a guarantee of 9 billion francs ($10 billion) to cover any potential losses associated with its acquisition of Credit Suisse.

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this in an emergency rescue," said Kelleher in a UBS press release. He promised to “preserve the value left in the business while limiting [UBS’s] downside exposure.”

UBS’s purchase of Credit Suisse represents an unprecedented emergency rescue engineered by the Swiss government in order to avoid further market calamities. The Swiss National Bank agreed to lend UBS up to 100 billion francs in liquidity to help the deal move forward.

The merger is what is known as an all-share transaction, or a merger paid for exclusively in shares. It is expected to be finalised by the end of this year, though full integration could take several years.

The deal was incredibly rushed, planned during a weekend of emergency discussions aimed at averting a total loss of value in Credit Suisse’s shares following the risk of a flat-out bank run. In comments to Swiss newspaper Neue Zürcher Zeitung, Switzerland’s Finance Minister Karin Keller-Sutter said that “If we had done nothing, [Credit Suisse] shares would have been worthless by Monday and the shareholders would have gone home empty-handed.”

Credit Suisse collapsed in March promptly after two US banks failed, sending shock waves of uncertainty through the global financial system. Silicon Valley Bank and New York's Signature Bank, whose demises followed bank runs, are the two biggest banks to go belly up since the 2008 financial crisis.

Swiss authorities have dealt with the failure of Credit Suisse with some extraordinary special treatment because of the serious risk of it further degrading confidence in the Swiss banking sector. For example, the Swiss government actually changed legislation in order to bypass shareholder approval and FINMA, the Swiss government financial regulator, wiped out around 16 billion francs ($17.8 billion) in Credit Suisse bonds in order to increase the bank’s core capital.

UBS previously employed McKinsey & Company for advisory services when the bank had considered buying Credit Suisse back in 2020, a foreshadowing of the current deal. McKinsey was also tapped for UBS’s recent drive to adopt an agile working method and to support former CEO Hamer’s executive strategy at the bank.

Credit Suisse had already long suffered from a tainted reputation thanks to a litany of (sometimes outrageous) scandals going back decades. These include holding the ill-gotten fortune of Philippine dictator Ferdinand Marcos under a fake name; money laundering for a Japanese yakuza gang; paying billions of dollars in fines for helping international clients evade taxes; and even holding over 100 Nazi-linked accounts, including an SS Commander sentenced in the Nuremburg trials whose account remained open for another 56 years, until it was finally closed in 2002. The Nazi-linked accounts prompted a US Senate subpoena.