History Swiss Bank Corporation

1 history

1.1 1900–1939
1.2 activities in world war ii
1.3 1945–1990
1.4 aggressive acquisitions (1990–1998)
1.5 merger union bank of switzerland
1.6 after merger
1.7 acquisition history

history

swiss bank corporation traces history 1854. in year, 6 private banking firms in basel, switzerland, pooled resources form bankverein, consortium acted underwriting syndicate member banks. among original member banks bischoff zu st alban, ehinger & cie., j. merian-forcart, passavant & cie., j. riggenbach , von speyr & cie. establishment of joint-stock banks in switzerland such swiss bank s earliest predecessors (often structured swiss verein) driven industrialization of country , construction of railroads in mid-19th century.

the basler bankverein formally organized in 1872 in basel, replacing original bankverein consortium. basler bankverein founded initial commitment of chf30 million, of chf6 million of initial share capital paid in. among bankverein s backers bank in winterthur, 1 of predecessors of union bank of switzerland. bank experienced initial growing pains after heavy losses in germany caused bank suspend dividend in favor of loss reserve. 1879, basler bankverein has accumulated enough capital resume dividends, @ 8% annual rate , increasing 10% in 1880.

basler bankverein later combined zürcher bankverein in 1895 become basler & zürcher bankverein. next year, basler depositenbank , schweizerische unionbank acquired. after take-over of basler depositenbank, bank changes name schweizerischer bankverein (swiss bank). english name of bank changed swiss bank corporation in 1917.

1900–1939

the st. gallen, switzerland, offices of swiss bank corporation c.1920

sbc continued grow in decades of 20th century, acquiring weaker rivals. in 1906, sbc purchased banque d espine, fatio & cie, establishing branch in geneva, switzerland, first time. 2 years later, in 1908, bank acquired fratelli pasquali, bank in chiasso, switzerland, first representation in italian-speaking portion of country. followed 1909 acquisition of bank für appenzell (est. 1866) , 1912 acquisition of banque d escompte et de dépots.

the onset of world war put hold on of bank s development. although sbc survived war intact, suffered loss of investments in number of large industrial companies. nevertheless, bank surpassed chf1 billion first time @ end of 1918 , grew 2,000 employees 1920. in 1918, sbc purchased métaux précieux sa métalor refine precious metals , produce bank ingots. company established separate subsidiary in 1936 , spun off in 1998. impact of stock market crash of 1929 , great depression severe, particularly swiss franc suffered major devaluation in 1936. bank see assets fall 1929 peak of chf1.6 billion 1918 levels of chf1 billion 1936.

in 1937, sbc adopted 3 keys logo symbolizing confidence, security , discretion. logo designed swiss artist , illustrator, warja honegger-lavater.

activities in world war ii

on eve of world war ii, sbc recipient of large influxes of foreign funds safekeeping. prior outbreak of world war ii, in 1939, swiss bank corporation made timely decision open office in new york city. office able begin operations, located in equitable building, weeks after outbreak of war , intended safe place store assets in case of invasion. during war, bank s traditional business fell off , swiss government became largest client. overall, sbc saw business grow result of wartime government underwriting business.

decades after war, demonstrated swiss bank corporation took active role in trading stolen gold, securities , other assets during world war ii.

in 1997, world jewish congress lawsuit against swiss banks (wjc) launched retrieve deposits made victims of nazi persecution during , prior world war ii. negotiations involving sbc s successor ubs, credit suisse, world jewish congress , stuart eizenstat, on behalf of us, resulted in settlement of us$1.25 billion in august 1998 paid 2 large swiss banks ubs , credit suisse. settlement, coincided ubs s merger swiss bank, bank s embarrassment in long term capital management collapse in 1998 brought degree of closure issue.

1945–1990

swiss bank corporation found in relatively strong financial condition @ end of world war ii, chf1.8 billion of assets. contrast, basler handelsbank (commercial bank of basel), founded in 1862 , 1 of largest banks in switzerland, insolvent @ end of war , consequently acquired sbc in 1945. sbc remained among swiss government s leading underwriters of debt in post-war years. however, 1947 sbc shifting focus traditional business of lending money principally private companies part of postwar rebuilding of europe. meanwhile, firm continued expansion international markets, particularly united states sbc focused on commercial banking corporate clients. within switzerland, sbc remained full-service bank domestic retail banking network , asset management business.

the swiss bank corporation board room in basel, switzerland

sbc prospered throughout 1950s , embarked on period of sustained growth. bank, had entered 1950s 31 branch offices in switzerland , 3 abroad, more doubled assets end of war chf4 billion end of 1950s , doubled assets again mid-1960s, exceeding chf10 billion in 1965. sbc acquired banque populaire valaisanne, sion, switzerland, , banque populaire de sierre. firm continued open new offices in in mid-1960s , @ time sbc began expand asia , opened representative offices throughout latin america. bank opened full branch office in tokyo in 1970. bank made number of acquisitions enhance position in various products. sbc acquired controlling interest in frei, treig & cie. in 1968, warag bank in 1970 , bank prokredit in 1979 (later sold ge capital in 1997). 3 banks focused on consumer lending. similarly, sbc acquired number of banks in private banking sector, including ehinger & cie. in 1974; armand von ernst & cie. , adler & co. in 1976; , majority interest in geneva-based ferrier lullin & cie. in 1978. bank continued consolidation of swiss banks acquiring banque commerciale de sion in 1978 , in 1979 acquired handwerkerbank basle, banca prealpina sa , bank für hypothekarkredite.

as own home market highly competitive, sbc focused on commercial banking american , other multinational companies. through 1979, sbc consistently largest of 3 major swiss bank assets, except short periods in 1962 , 1968 when ubs temporarily moved ahead of sbc. after 1979, although balance sheet had grown chf74 billion of assets, bank typically rank second ubs firmly established largest swiss bank in 1980s. sbc retain position next 15 years until credit suisse leapfrogged top spot following 1995 acquisitions of schweizerische volksbank , winterthur group.

aggressive acquisitions (1990–1998)

the former swiss bank tower off of fifth avenue in new york city opened in 1990.

swiss bank began 1990s weakest of big 3 swiss banks end of 1997 driving force behind merger union bank of switzerland. sbc had been impacted losses on real estate investments , series of minor controversies, despite bank s historically conservative posture. beginning in 1980s, sbc along swiss peers began embrace more aggressive strategy keep competitors in us, japan, germany , uk. bank signaled new posture in 1990 when opened new headquarters, swiss bank tower, 29 floor building on 49th street, adjoining saks fifth avenue.

sbc shifted focus traditional commercial banking toward investment banking emphasis on building trading operations. bolster trading initiative, in 1992, sbc acquired o connor & associates, chicago-based options trading firm, expertise in financial derivatives. o connor founded in 1977 mathematician michael greenbaum , named edmund (ed) , williams (bill) o connor. o connor brothers had made fortune trading grain on chicago board of trade , founded first options, clearing house business. o connors provided greenbaum, had run risk management first options, capital start own firm. sbc had established strategic relationship o connor, largest market maker in financial options exchanges in us, beginning in 1988. o connor had been looking partner larger financial institution , in 1989 entered currency joint venture sbc proved first step towards sale of o connor sbc. following merger, o connor combined sbc s money market, capital market , currency market activities form globally integrated capital markets , treasury operation. number of o connor executives brought key positions within bank in attempt cultivate more entrepreneurial culture @ sbc.

sbc acquired gary p. brinson s brinson partners in 1994 bolster bank s asset management business.

in 1994, sbc followed acquisition of o connor acquiring brinson partners asset management firm focused on providing access institutions global markets. founded gary p. brinson, innovator in financial management, brinson partners had emerged 1 of largest managers of pension plans , managed series of mutual funds. brinson pioneer in development of theory of asset allocation had largely become conventional wisdom among money managers in 1980s , 1990s. brinson had begun working @ first chicago corporation in 1970s , 1981 began building business become brinson partners. in 1989, brinson led us$100 million management buyout of firm first chicago corporation , on next 5 years built firm approximately us$36 billion of assets under management. sbc paid us$750 million acquire brinson partners, resulted in profit brinson , partners of us$460 million on sale of 75% stake in company. following acquisition of brinson partners, gary brinson ran sbc s asset management business , after merger ubs, brinson named chief investment officer of ubs global asset management.

sbc s next made major push investment banking acquisition of s.g. warburg & co. leading british investment banking firm in 1995 us$1.4 billion. s.g. warburg founded siegmund warburg, member of warburg banking family. after world war ii, s.g. warburg established reputation daring merchant bank grew 1 of respected investment banks in london. following flawed , costly expansion us, in 1994 merger announced morgan stanley, talks collapsed. following year s.g. warburg purchased swiss bank corporation,. bank merged s.g. warburg own existing investment banking unit create sbc warburg, became leading player in global investment banking.

two years later, in 1997, sbc paid us$600 million acquire dillon, read & co., white shoe investment banking firm considered member of bulge bracket. dillon, read, traced roots 1830s among powerhouse firms on wall street in 1920s , 1930s , 1990s had particularly strong mergers , acquisitions advisory group. dillon read had been in negotiations sell ing owned 25% of firm already, dillon read partners balked @ ing s integration plans. after acquisition sbc, dillon read merged sbc-warburg create sbc-warburg dillon read. dillon read name discontinued after merger union bank of switzerland although brought in 2005 dillon read capital management, ubs s ill-fated hedge fund operations.

merger union bank of switzerland

aggressively pushing ahead various acquisitions, ubs mired in series of entanglements activist shareholders critical of bank s relatively conservative management. martin ebner, through investment trust, bk vision became largest shareholder in ubs , attempted force major restructuring of bank’s operations. groundwork merger of sbc , ubs laid mutual competitor, credit suisse had approached ubs merger have created second largest bank in world in 1996. ubs s management , board unanimously rebuffed proposed merger. ebner, supported idea of merger, led major shareholder revolt resulted in replacement of ubs s chairman, robert studer. studer s successor mathis cabiallavetta 1 of key architects of merger sbc.

the combined ubs logo incorporated ubs s name sbc s 3 keys symbol.

on december 8, 1997, union bank of switzerland , sbc announced all-stock merger. @ time of merger, union bank of switzerland , swiss bank corporation second , third largest banks in switzerland, respectively, both trailing credit suisse. discussions between 2 banks had begun several months earlier, less year after rebuffing credit suisse s merger overtures.

the all-stock merger resulted in creation ubs ag, huge new bank total assets of more us$590 billion. referred new ubs distinguish former union bank of switzerland, combined bank became second largest in world, @ time, behind bank of tokyo-mitsubishi. additionally, merger pulled banks various asset businesses create world s largest money manager, approximately us$910 billion in assets under management.

the merger, billed merger of equals, resulted in sbc s shareholders receiving 40% of bank s common shares , union bank s shareholders receiving 60% of combined company. sbc s marcel ospel named chief executive officer while union bank s mathis cabiallavetta became chairman of new bank. however, became evident management perspective, sbc buying ubs 80% of top management positions filled legacy swiss bank professionals. additionally, ubs professionals suffered more headcount reductions, particularly in investment banking unit there heavy cuts in corporate finance , equities businesses. prior merger, swiss bank corporation had built global investment banking business, warburg dillon read through acquisitions of dillon read in new york , s.g. warburg in london. sbc considered further along ubs in developing international investment banking business, particularly in higher margin advisory businesses warburg dillon read considered more established platform.

after merger completed, speculated series of losses suffered ubs on equity derivative positions in late 1997 provided sbc leverage required consummate merger. become clear derivatives losses prompted ubs accept terms proposed sbc more readily otherwise have.

after merger

sbc had announced in 1994 bank move headquarters stamford, connecticut, in exchange us$120 million in tax credits. later headquarters of ubs investment bank s trading operations, stamford complex featured largest trading floor ever built, size of 2 football fields. following expansion in 2002, floor covers 103,000-square-foot (9,600 m) 40-foot (12 m) arched ceilings.

ubs, successor of union bank of switzerland, among largest diversified financial institutions in world. of 2010, ubs operated in of major financial centers worldwide offices in on 50 countries , 64,000 employees globally.

in november 2000, ubs merged paine webber american stock brokerage , asset management firm led chairman , ceo, donald marron. acquisition pushed ubs top wealth , asset management firm in world. business given divisional name ubs painewebber in 2003 123-year-old name paine webber disappeared when renamed ubs wealth management usa.

the bank grow considerably in 2000s, building large investment banking franchise compete major , european bulge bracket firms. however, ubs suffered major setbacks in 2007, 2008 , 2009. ubs suffered among largest losses of european bank during subprime mortgage crisis , bank required raise large amounts of outside capital government of singapore investment corporation, swiss government , through series of equity offerings in 2008 , 2009.

acquisition history

swiss bank corporation, prior merger union bank of switzerland result of combination of dozens of individual firms, many of date 19th century. following illustration of company s major mergers , acquisitions , historical predecessors, although not comprehensive list: