The Swiss government has hired consultants from Alvarez & Marsal to facilitate its role in the acquisition of failed Swiss bank Credit Suisse by UBS.
Consulting firm Alvarez & Marsal was awarded a contract worth 8.7 million Swiss francs ($10 million) by the Swiss Federal Finance Administration (FFA) to aid them in managing the landmark acquisition, which sent a tidal wave through Europe’s and the Swiss banking scene.
According to a spokesperson from the Ministry of Finance who spoke to Reuters, Alvarez & Marsal will provide advisory services to the government throughout the deal process in creating a complicated agreement with UBS, as well as in the process of liquidating assets.
The acquisition of Credit Suisse by UBS is a monumental endeavor for all parties involved and quickly became a boon for consultancies, with major contracts awarded at both sides of the deal and post-merger integration table. Most notably, Oliver Wyman shrugged off McKinsey, BCG and Bain to land UBS’ post-merger mandate.
The Swiss government orchestrated an emergency rescue plan in which UBS was enticed to acquire Credit Suisse post-haste, with the aim of preventing any additional market troubles. To sweeten the deal, the Swiss National Bank agreed to provide UBS with up to 100 billion francs ($112.4 billion) in liquidity.
The Swiss government also promised UBS with a guarantee of 9 billion francs ($10.1 billion) to cover any potential losses associated with its acquisition of Credit Suisse. Alvarez & Marsal has been brought in to support the contractual implementation of this guarantee, and provide related economic advisory services.
Headquartered in New York, Alvarez & Marsal is a multinational consulting firm that specialises in turnaround management. The firm famously provided liquidation services for Lehman Brothers after the bank collapsed, triggering the devastating 2008 global financial crisis. The consultancy opened its first office in Switzerland in 2019.
UBS is the largest Swiss bank and one of the largest private banks in the world. The merging of UBS and what remains of Credit Suisse will result in an incredibly large bank twice the size of the entire economy of Switzerland. With ‘too-big-to-fail’ doctrine inspiring less confidence than ever, the extent to which this merger can soothe uncertainties in the global financial system appears to be in doubt.
Credit Suisse’s collapse in March followed closely after the failure of three US banks, which caused significant uncertainty in the global financial system. Silicon Valley Bank, Signature Bank and First Republic Bank, the largest banks to fail since the 2008 financial crisis, suffered liquidity crises after spooked customers withdrew mountains of cash in panicked bank runs.
