![]() ![]() Under the rescue deal engineered by Swiss authorities over one March weekend amid global banking turmoil, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.4 billion) in stock and to assume up to 5 billion francs in losses that would stem from winding down part of the business. UBS said it was rushed into the deal and had less than four days to complete due diligence given the emergency circumstances as Credit Suisse's financial health rapidly worsened after it had already endured a difficult year. The restrictions "will cause certain clients to leave Credit Suisse" but may not accelerate the pace of outflows already seen, said Quinlan, following UBS's statement last week that Credit Suisse had already stemmed asset outflows. "Ultimately, from UBS' perspective, they will have to wear these risks on their books." "Credit Suisse obviously found itself in a problem because of lapses in its risk controls and I think just setting these parameters on the ability or standards to lend out is not very unreasonable," said Benjamin Quinlan, Hong Kong-based chief executive of financial consultancy firm Quinlan & Associates. Meanwhile, UBS has implemented a number of restrictions on Credit Suisse while the takeover is underway, including limits on how much it can lend, how much it can spend and the size of certain contracts it can enter into. ![]() Savings will come principally from cutting staff, UBS has said in recent weeks. It also said it might book restructuring provisions after that, but offered no numbers.Ĭharges to restructure the bank are likely to be booked after the transaction closes, Vontobel analyst Andreas Venditti said in a note. In providing the first snapshot of what the combined group will look like, UBS said the estimates were preliminary and the numbers could change materially. While the financial implications of the deal were widely anticipated - UBS shares were broadly steady on Wednesday - the scale of the adjustments are yet another sign of Credit Suisse's frailty and the challenges UBS faces in integrating the lender. The financial cushion will help absorb potential losses and could result in a boost to the lender's second-quarter profit if UBS closes the transaction next month as planned. However, that would be offset by $17.1 billion from a write-down of Credit Suisse's AT1 bonds and other factors.įurthermore, UBS estimated it would book a one-off gain stemming from the so-called negative goodwill of $34.8 billion by buying Credit Suisse for a fraction of its book value. It also listed other factors, including a switch in accounting standards, that would bring the total hit to $28.3 billion. In a regulatory presentation, UBS estimated a negative impact of $13 billion from fair value adjustments of the combined group's financial assets and liabilities, and a further $4 billion in potential litigation and regulatory costs stemming from outflows. May 16 (Reuters) - UBS (UBSG.S) has flagged tens of billions of dollars of potential costs - and benefits - from its takeover of Credit Suisse (CSGN.S), underscoring the high stakes involved as it prepares to complete the rescue of its struggling Swiss rival. ![]()
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