The UBS-Credit Suisse Merger: Helvetia’s Gift

41 Pages Posted: 26 Jun 2023 Last revised: 27 Mar 2024

See all articles by Pascal Böni

Pascal Böni

Tilburg University; Tilburg School of Economics and Management

Tim Alexander Kroencke

FHNW School of Business

Florin P. Vasvari

London Business School

Date Written: June 20, 2023


The UBS- Credit Suisse (CS) merger in March 2023, one of the biggest banking unions in history, was an emergency rescue deal engineered by Swiss authorities to avoid more market-shaking turmoil in global banking. The merger resulted in a significant increase in the combined stakeholder net wealth, totaling 19.5 billion US dollars. This increase was distributed around the merger announcement through abnormal returns to UBS stockholders (7.95%) and CS bondholders (34.74%), equivalent to approximately 5.1 billion and 18.8 billion US dollars, respectively. In contrast, CS stockholders experienced negative abnormal stockholder returns of -55% (-4.4 billion USD) while the UBS bonds’ value was not impacted by the merger. We infer that UBS stockholders received a wealth transfer from CS stockholders and that this transfer is likely explained by unusual restrictions on the number of bidders for CS. The observed effects on bondholders’ wealth align with previous research on coinsurance and the implications of “too-big-to-fail” research findings. We conclude that the combined wealth effect, which cannot be attributed to the short-term abnormal returns on securities of the two banks, is externally driven. It appears to come at the expense of taxpayers: the merger-bailout has increased Switzerland’s sovereign credit risk, resulting in an expected 6 to 7 billion US dollars in additional debt costs for the country.

Keywords: Economic crises, bank bailouts, merger, fire-sale, additional tier 1 (AT1), contingent convertible bonds(CoCo), regulation, security design, systemically important banks (SIB), too-big-to-fail

JEL Classification: G01, G10, G14, G20, G21, G28, G32, G33, G34, G38, H12

Suggested Citation

Böni, Pascal and Kroencke, Tim Alexander and Vasvari, Florin P., The UBS-Credit Suisse Merger: Helvetia’s Gift (June 20, 2023). Available at SSRN: or

Pascal Böni (Contact Author)

Tilburg University ( email )

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TIAS Building
Tilburg, Noord-Brabant 5037 AB
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Tilburg School of Economics and Management ( email )

Tilburg, 5000 LE

Tim Alexander Kroencke

FHNW School of Business ( email )

Peter Merian-Strasse 86
Basel, 4002

Florin P. Vasvari

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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