Credit Suisse and Winterthur merger creates pounds 21bn giant
Tuesday 12 August 1997
The link is the latest move in a wave of consolidation expected to sweep Europe's financial sector in the run-up to monetary union.
The bank, Switzerland's second-largest, announced the proposed merger as it brought forward half-year profits showing a 70 per cent jump in profits to SFr1.4bn (pounds 579m). The sharp rise, which followed a similar improvement last week from Union Bank of Switzerland, was attributed to buoyant financial markets, domestic restructuring and the weakness of the Swiss currency.
Credit Suisse has been looking for a partner since its proposals to merge with UBS were rejected last year. Under the terms of the deal Winterthur will remain autonomous and retain its own name.
Speculation about the future of Winterthur increased over the weekend when Martin Ebner, one of Switzerland's leading shareholder activists, said he planned a takeover of the company in which he had built up a 30 per cent stake through BZ Bank. He offered a takeover by Credit Suisse as an alternative and said yesterday's news was a "welcome solution at a very fair price".
The deal was also described by Winterthur chairman Peter Spaelti as "totally fair". He insisted the transaction was a merger of the two companies not a takeover, describing the planned share swap as convenient for tax reasons.
The support of Mr Ebner is important because 98 per cent of the insurer's shareholders need to approve the deal. Support was also forthcoming from Swiss Reinsurance, which holds about 5 per cent of Winterthur's shares.
Mr Ebner also holds around a quarter of UBS's shares and has been locked in a legal battle with the bank for the past three years over the introduction of a new share structure.
Following the merger, Mr Ebner is expected to control around 7 per cent of the new group's shares, depending on whether he accepts Credit Suisse shares for all his holding.
The merger would establish the group as one of the world's top providers of banking and insurance services. The group would manage funds of about SFr700bn, have about 15 million clients and is expected to make profits in 1998 of SFr3.49bn.
If the deal is approved, Credit Suisse would make Winterthur shareholders an offer under which 7.3 Winterthur shares would be exchanged for one Credit Suisse share.
Approval of the deal could hinge on the reaction of the US regulatory authorities, according to Salomon Brothers' banking analysts John Leonard. "One uncertainly may relate to Winterthur's US business - perhaps 15 per cent of the total - as US regulators are unfriendly to the principle of bancassurance," he said.
European Union officials are also expected to take a close look at the deal, with sources saying yesterday the merger appeared sufficiently large to require examination.
- 1 Double chins could be 'cured' without surgery or dieting using new injection
- 2 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 3 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Thank heavens for Louise Mensch and her foul-mouthed tweets to world leaders
- 5 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...