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. Last Updated: 07/27/2016

Credit Suisse to Merge With Winterthur

ZURICH, Switzerland -- Credit Suisse banking group said Monday it planned to merge with the Winterthur insurance company to form one of the world's biggest financial services concerns with assets of 700 billion Swiss francs ($466 billion).


Shareholders of both companies will vote on the merger Sept. 5. Analysts generally gave the thumbs-up to the proposal and predicted it would get the go-ahead.


The merger would establish the group as one of the world's top providers of banking and insurance services, according to a statement from Credit Suisse, Switzerland's second biggest bank.


The group would manage funds of about 700 billion francs and have about 15 million clients. It would have a market capitalization of 50 billion francs.


If the deal is approved, Credit Suisse would make Winterthur shareholders an offer under which Winterthur shares would be exchanged at a ratio of 1 to 7.3.


For instance, based on Friday's closing share prices, Winterthur holders would get 1,522 Swiss francs -- 7 percent more than the previous monthly average and a record for Winterthur shares.


Credit Suisse said up to 500 jobs worldwide would be lost as a result of the proposed merger. It forecast savings of 300 million to 350 million francs would be made within three years because of rationalization.


Credit Suisse also announced Monday its first half profits rose a staggering 70 percent to 1.4 billion francs. This was largely due to buoyant financial markets, domestic restructuring and the weaker Swiss franc against other currencies, it said.


Credit Suisse already had close links with Winterthur. It had been looking for a new partner ever since Switzerland's biggest bank -- Union Bank of Switzerland -- rejected its merger proposals last year.


Winterthur, Switzerland's second largest insurance company, would remain autonomous and keep its own name under the deal.


The company has been the subject of merger speculation for months -- with some form of takeover by Credit Suisse frequently mentioned.


Speculation about the future of Winterthur peaked at the weekend when Martin Ebner, one of Switzerland's most prominent shareholders, said he planned to take over the insurance company. As an alternative, he held out the option of a takeover by Credit Suisse.


Ebner welcomed Monday's news as a "sensible industry solution at a very fair price.'' Ebner's approval is important because 98 percent of Winterthur shares need to be exchanged under the terms of Credit Suisse's proposals.


Ebner's BZ Gruppe bought up approximately 30 percent of Winterthur in recent weeks, the financier revealed at the weekend.