UBS has whittled down its shortlist to four management consultants to advise on its integration of rival Credit Suisse, in what is expected to be one of the most lucrative financial services advisory contracts in recent years.
Swiss bank UBS is set to decide whether to award the contract to Bain & Company, Boston Consulting Group, McKinsey or Oliver Wyman in the coming days, according to people involved in the process. Smaller contracts could be awarded at later dates for more specialist work, said the same people who warned UBS could decide to reopen the process.
UBS executives invited bids from management consultants in the days following its agreement to rescue Credit Suisse in a historic $3.25bn deal that was orchestrated by Swiss authorities.
The task of bringing together for the first time two global systemically important financial institutions is expected to take several years and be fiendishly complicated.
The combined group will have 120,000 staff globally, but tens of thousands of job cuts are expected.
This week, UBS chair Colm Kelleher replaced chief executive Ralph Hamers with his predecessor Sergio Ermotti in recognition of the scale of the challenge of making the transaction a success.
“This is the biggest single financial transaction since 2008,” Kelleher told reporters. “That brings with it significant execution risk.”
Ermotti, who officially starts on Wednesday, is expected to have a say on which consultant is chosen, though the integration process is being led by chief information and digital officer Mike Dargan.
Claiming the contract will be a boon for the winning bidder, at a time when banks are generally cutting back on their spending on outside consultants.
Last year, UBS targeted reducing its spending on external advisers as part of a pre-takeover drive to cut $1bn of costs by the end of this year.
In recent years, UBS has employed McKinsey to help Hamers develop his strategy for the bank, which was unveiled last year, and to implement an agile working strategy, which is aimed at speeding up decision-making. Some senior bankers have expressed concern about UBS developing an over-reliance on the firm.
Similarly, the bank used consultants from Oliver Wyman to advise on its risk management operations and BCG for some smaller projects, according to people familiar with internal workings.
Credit Suisse had also been attempting to reduce its use of external advisers, which included a plan to halve spending on consultants last year. It reduced its external consultant headcount by a fifth in the final quarter of 2022. It relied on advice from McKinsey for its two recent restructuring plans — one under former chair António Horta-Osório and the other from last year that aimed at radically reforming the business.
As part of the accompanying cost-cutting plans, Credit Suisse sought advice from Oliver Wyman and BCG, while Deloitte provided input on the bank’s pay policy, according to people with knowledge of their involvement.
UBS, Bain, BCG, McKinsey and Oliver Wyman declined to comment.
Additional reporting by Michael O’Dwyer
Source: Financial Times