Rating agency Moody’s has changed its outlook on the long-term deposit and senior unsecured ratings of Swiss bank UBS from stable to negative, according to a statement from the agency.
The change in forecast came after UBS and Credit Suisse (SIX:CSGN) announced a merger that would see UBS acquire Credit Suisse by paying with its own shares. Moody’s decision to change the rating was made, on the one hand, taking into account the favourable financial terms of the deal in terms of liquidity, capital and long-term potential for expanding the franchise, and, on the other hand, the difficulty, scale and duration of the upcoming integration.
The agency noted “significant financial, cultural, and franchise integration challenges” for UBS in relation to the deal. The bank now needs to retain key Credit Suisse employees during the deal, minimise the loss of duplicate clients in Swiss banking and asset management divisions, and deal with the need to merge the cultures of different organisations, according to Moody’s.