Embracing the cruel reality

March 22, 2023 12:58
Photo: Reuters

Everything that can be wrong in Credit Suisse went very wrong in the 166-year franchise.

But at least one thing it didn’t. The theme of its Asian Investment Conference this year – and probably the last – was rightly named “Embracing reality”.

Who can predict the sudden demise of Credit Suisse, quickly snapped up by bigger rival UBS over the weekend in a deal orchestrated by the Swiss government that aimed at restoring confidence in the global financial system and avoiding another Lehman Brothers.

Poor Credit Suisse, whose Hong Kong team had a strong track record among its prestigious clients, buy-side analysts and even media. In a normal March in the last decade, the global investors were invited to come to Hong Kong for its three-day conference followed by a crazy weekend of Rugby 7 it used to sponsor in one of the city’s most signature events.

All these went into memories now the realities took over. Hundreds, if not thousands, of local Credit Suisse staff called headhunters in the past days knowing that it is quite unlikely they would be invited to join UBS.

Unlike the other mergers, this Swiss combo is more a marriage born out of pain rather than love, as Yahoo Finance concluded.

UBS chair Colm Kelleher said on Monday the deal is an emergency rescue, "It's a historic day, and a day we hoped would not come."

That spells the end of Credit Suisse, while its shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares.

To embrace the reality, Credit Suisse chairman Axel Lehmann and Chief Executive Ulrich Korner had to excuse themselves on the Asian Investment Conference starting Monday.

In a responsive protocol, Chief Executive John Lee also sent his deputy Financial Secretary Michael Wong to the opening that was said to attract some 1,600 participants at the Conrad Hotel.

But on his usual standup before the Exco meeting, Lee mistakenly said it was Swiss National Bank (later rectified in the official transcript as UBS) that has already bought (in fact not officially completed) Credit Suisse. Lee noted that the operations and assets of Credit Suisse in Hong Kong are relatively small and reassured that the city’s banking system is resilient.

Despite all the wrongs, let’s not forget Credit Suisse did make a good run in Hong Kong, but unfortunately nothing lasts forever.

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EJ Insight writer