UBS Setup Legal Team to Review Options on Terminating Credit Suisse $175 Million Acquisition of New York Investment Bank The Klein Group in Merger with Credit Suisse Investment Bank to Create CS First Boston
25th March 2023 | Hong Kong
UBS has setup a legal team to review options on terminating Credit Suisse $175 million acquisition of New York investment bank The Klein Group, which was planned to merge with Credit Suisse investment bank to create an independent CS First Boston. The acquisition was announced in February 2023 – Credit Suisse has acquired New York investment bank The Klein Group with over $1.5 trillion transactions (advisory) for $175 million, with Michael Klein (ex-Credit Suisse board director & ex-CEO of Citigroup Institutional Business) appointed as Credit Suisse CEO of Banking & Americas and CEO designate of CS First Boston. But on 19th March 2023, UBS (the largest bank in Switzerland) announced to acquire 167-year-old Credit Suisse for $3.24 billion (transaction to close end 2023) with $5.4 billion in losses guaranteed by Swiss Government in the latest casualty of the 2023 Banking Crisis (Silicon Valley & Signature Bank, First Republic Bank averted a collapse). More info below. UBS Acquires Credit Suisse: Read here
“ UBS Setup Legal Team to Review Options on Terminating Credit Suisse $175 Million Acquisition of New York Investment Bank The Klein Group in Merger with Credit Suisse Investment Bank to Create CS First Boston “
Credit Suisse Acquires New York Investment Bank The Klein Group with Over $1.5 Trillion Transactions for $175 Million, Ex-Credit Suisse Board Director & Ex-CEO of Citigroup Institutional Business Michael Klein Appointed as CEO of Banking & Americas & CEO Designate of CS First Boston
11th February 2023 – Credit Suisse has acquired New York investment bank The Klein Group with over $1.5 trillion transactions (advisory) for $175 million, with Michael Klein (ex-Credit Suisse board director & ex-CEO of Citigroup Institutional Business) appointed as Credit Suisse CEO of Banking & Americas and CEO designate of CS First Boston. Credit Suisse: “As announced by Credit Suisse at its Strategy Update on October 27, 2022, the carveout of CS First Boston is expected to create an independent capital markets and competitive advisory led business, headquartered in the US, with global capabilities and a preferred long-term partnership with Credit Suisse Group. CS First Boston, with its differentiated proposition and partnership model, is expected to be more global and broader than existing investment-banking boutiques, more focused than bulge bracket players, and to be competitive in attracting and retaining top talent. MK&C is an internationally recognized investment-banking boutique and registered broker-dealer, with deep and long-standing client relationships including a broad network of senior executives at S&P 500 and blue-chip companies around the globe. MK&C, which is based in New York and employs approximately 40 professionals, has advised on transactions worth over $1.5 trillion since its formation in 2010. It has been consistently profitable, while contributing a portion of its earnings to philanthropic initiatives. The MK&C team will integrate with, and is expected to enhance, the management and advisory capabilities of CS First Boston. The registered broker-dealer business of M. Klein & Company LLC. The principal amount of the convertible note is expected to be $100 million, with the balance being paid in cash dependent on the tax consideration to be paid by the seller at closing. The purchase price is $175 million. The NPV of the transaction to Credit Suisse is expected to be approximately $210 million which also includes interest cost, annual payments on the note and other payments that may in the future become payable in respect of this transaction.” See more info below.
Axel P. Lehmann, Chairman of the Board of Directors of Credit Suisse: “We are very pleased to announce the planned addition of Michael Klein to our Executive Board through the acquisition of The Klein Group. Michael’s experience and leadership will further strengthen our Executive Board and will help create shareholder value through this key strategic step of creating CS First Boston as an independent global capital markets and competitive advisory led business.”
Ulrich Körner, Chief CEO of Credit Suisse: “This acquisition of The Klein Group is an exceptional opportunity for Credit Suisse to successfully deliver on its strategic objective to carve out CS First Boston as an independent global capital markets and competitive advisory led business. This will provide meaningful additional opportunities for the Group and an attractive value proposition for all our stakeholders. We see this move as a strategic way to create shareholder value.
I am looking forward to welcoming Michael Klein to the Executive Board. He is an exceptional banker and dealmaker with proven and recognized entrepreneurial success, and I am confident that CS First Boston will thrive under his leadership. The creation of an independent CS First Boston is an important step in the wider transformation of Credit Suisse and the creation of a simpler, more focused bank built around the needs of our clients.”
Credit Suisse Acquires New York Investment Bank The Klein Group with Over $1.5 Trillion Transactions for $175 Million, Ex-Credit Suisse Board Director & Ex-CEO of Citigroup Institutional Business Michael Klein Appointed as CEO of Banking & Americas & CEO Designate of CS First Boston
Credit Suisse 9th Feb 2023 – As announced by Credit Suisse at its Strategy Update on October 27, 2022, the carveout of CS First Boston is expected to create an independent capital markets and competitive advisory led business, headquartered in the US, with global capabilities and a preferred long-term partnership with Credit Suisse Group. CS First Boston, with its differentiated proposition and partnership model, is expected to be more global and broader than existing investment-banking boutiques, more focused than bulge bracket players, and to be competitive in attracting and retaining top talent.
MK&C is an internationally recognized investment-banking boutique and registered broker-dealer, with deep and long-standing client relationships including a broad network of senior executives at S&P 500 and blue-chip companies around the globe. MK&C, which is based in New York and employs approximately 40 professionals, has advised on transactions worth over $1.5 trillion since its formation in 2010. It has been consistently profitable, while contributing a portion of its earnings to philanthropic initiatives. The MK&C team will integrate with, and is expected to enhance, the management and advisory capabilities of CS First Boston.
The registered broker-dealer business of M. Klein & Company LLC. The principal amount of the convertible note is expected to be USD 100 million, with the balance being paid in cash dependent on the tax consideration to be paid by the seller at closing. The purchase price is USD 175 million. The NPV of the transaction to Credit Suisse is expected to be approximately USD 210 million which also includes interest cost, annual payments on the note and other payments that may in the future become payable in respect of this transaction.
Michael Klein, Ex-Credit Suisse Board Director & Ex-CEO of Citigroup Institutional Business
- Ex-Credit Suisse Board Director & Ex-CEO of Citigroup Institutional Business Michael Klein Appointed as CEO of Banking & Americas & CEO Designate of CS First Boston
Michael Klein is an experienced investment banker and financial industry leader with an established track record of building leading advisory and capital raising firms, including MK&C, with over 35 years of investment-banking and strategic-advisory experience. In October 2022, Michael Klein stepped down from the Credit Suisse Board of Directors, which he joined in 2018. He was previously CEO of Citigroup’s institutional businesses, where he was responsible for the bank’s corporate, institutional and government businesses, including corporate banking, transaction services, corporate lending, advisory, debt and equity underwriting, and alternative asset management activities. Under his leadership, the firm grew organically and, through mergers he initiated or executed, contributed to the building of a top tier firm in mergers and acquisitions and capital raising globally.
To align interests with Credit Suisse, M. Klein & Company LLC (the seller), will receive a convertible note and a warrant. The note will provide annual payments and convert into, and the warrant entitles the seller to subscribe to, CS First Boston shares at a qualified initial public offering or other liquidity event, at the then-valuation of CS First Boston, less a customary discount. The transaction is expected to have a limited effect on Credit Suisse Group’s CET1 ratio of less than 10 basis points. Deutsche Bank AG, London Branch, has provided a fairness opinion to the Board of Directors of Credit Suisse Group AG in connection with the acquisition.
Following the acquisition’s closing, MK&C is expected to be fully integrated into CS First Boston. Credit Suisse will retain control over the ultimate scope and structure of CS First Boston, including options to attract third-party capital in the future, as announced at the bank’s Strategy Update on October 27, 2022. Michael Klein’s appointment to the Credit Suisse Executive Board and Credit Suisse’s acquisition of MK&C are subject to regulatory approvals, with the transaction expected to close in the first half of 2023.
Credit Suisse
Credit Suisse is one of the world’s leading financial services providers. The bank’s strategy builds on its core strengths: its position as a leading wealth manager, its specialist investment banking and asset management capabilities and its strong presence in its home market of Switzerland. Credit Suisse seeks to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. The bank employs more than 50,000 people. The registered shares (CSGN) of Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
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