Oliver Wyman beats MBB to UBS-Credit Suisse integration
Following the rapid collapse of Credit Suisse, Swiss authorities pushed through a multi-billion dollar deal to secure its future, grafting it to UBS. The hastiness of the deal forced the buyer to consolidate the strategy and integration phases of the M&A process – something which saw Oliver Wyman beat the world’s biggest consulting names to take on the contract.
Credit Suisse is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centres around the world and provides services in investment banking, private banking, asset management, and shared services. In recent years, however, the bank has endured a spectacular fall from grace.
The bank first suffered a reputational knock in late 2019, when former CEO Tidjane Thiam resigned following the bank’s admission that it had hired private detectives to spy on former staff. In 2021, after the initial tumult of the pandemic, the collapse of Archegos Capital and Greensill Capital then hit Credit Suisse with $1 billion in losses and a further management shake-up, before early 2022 saw Chair Antonio Horta-Osorio resign having been caught breaking Covid-19 quarantine laws.
By summer of that year, rumours had begun to circulate that there were deeper issues at the bank – and as suggestions began to appear that Credit Suisse faced impending failure, clients pulled roughly $119 billion in funds in the final quarter of 2022 alone. At the start of 2023, the bank hoped to borrow up to $54 billion to shore up liquidity, but Saudi National Bank – its key backer – blocked the move because of regulatory issues. This left the bank acutely exposed when US institutions Silicon Valley Bank and Signature Bank failed in March.
As Switzerland’s executive branch faced the potential collapse of one of its largest financial institutions – and considered the implications this might have on the wider financial system – it swiftly moved to avert disaster. The executive voted to allow a takeover without shareholder approval.
UBS agreed to buy Credit Suisse on these terms, for $3.25 billion. At the time, UBS Chairman Colm Kelleher said that it would likely take months to close the deal and as much as four years to complete the integration. However, the deal was eventually pushed through in two days, leaving UBS underprepared for its completion.
Usually the merger of two organisations goes through a lengthy strategy phase, supported by strategy consultants. At clients the size of UBS and Credit Suisse, this is usually taken on by one of the world’s largest strategy brands – the MBB, of McKinsey & Company, Bain & Company and Boston Consulting Group. Only after that does integration work begin – usually with support from a generalist consultancy. In cases like this, that would often be a Big Four firm, like PwC, EY, KPMG or Deloitte.
The speed at which the deal for Credit Suisse has been done has forced a change of tact from UBS, though. Without the time for that initial lengthy phase of planning, the company has had to consolidate strategy and integration into one single, multi-year project, which will be undertaken by Oliver Wyman.
Oliver Wyman
Oliver Wyman is best known as a strategy consultancy, though it also provides services like auditing for large clients across Europe’s banking sector. UBS may have seen this as a plus, when it came to hiring it for advice on the takeover of Credit Suisse, as well as implementing cuts and winding down unwanted businesses.
The combined group currently has 120,000 staff globally, but UBS is reportedly looking to find over $8 billion in cost savings from the merger, which will likely put tens of thousands of jobs at risk. At the same time, it will look to exit large parts of Credit Suisse’s investment bank, and integrate other businesses, tying up managerial and staff resources.
Sources familiar with the matter have told the press that Oliver Wyman’s role in this is likely to result in a substantial fee for the firm. The firm itself has not currently commented on the appointment.
The news also coincides with UBS reappointing Sergio Ermotti as Chief Executive Officer to oversee the integration. Ermotti previously ran UBS as CEO from 2011 to 2020, during which time he appointed Huw van Steenis as a Senior Advisor. Steenis has since exited UBS, and became Vice Chair of Oliver Wyman in November 2022.
