UBS Group AG said it expects to close the acquisition of Credit Suisse Group AG in May and will post a significant accounting-related gain from the takeover of its erstwhile biggest rival.
(Bloomberg) — UBS Group AG said it expects to close the acquisition of Credit Suisse Group AG in May and will post a significant accounting-related gain from the takeover of its erstwhile biggest rival.
The gain, which the bank said would be “material,” relates to the fair value of Credit Suisse’s assets over the roughly $3 billion that UBS agreed to pay in the emergency rescue of the lender. As of end-March, Credit Suisse had a book value of 54 billion francs ($61 billion) and analysts have pointed out how its local business, Swiss Universal Bank, is probably worth much more than what UBS paid for the whole of Credit Suisse.
UBS hasn’t yet disclosed details of the integration including job cuts and restructuring costs. It plans to give details on the combined company’s financials and the size of the non-core unit it plans to wind down at second-quarter earnings, assuming a May closing, it said. Further disclosures around restructuring costs and financial targets are likely to come later in the second half of the year.
Last month, the bank brought back Sergio Ermotti as chief executive officer to oversee the takeover as the firm embarks on an extensive restructuring. Chairman Colm Kelleher has said it will take as long as four years to wrap up the merger.
“The complexity of the integration will require sustained diligent effort,” UBS said.
Though Credit Suisse’s book value gives UBS plenty of protection against losses, the deal with Swiss authorities bolsters that shield. The government would bear as much as 9 billion francs of losses on certain non-core assets after the first 5 billion francs of losses to be borne by UBS.
If necessary, further loss-sharing between the Swiss government and UBS will be subject to ongoing assessment, UBS said in Tuesday’s statement.
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