2023-08-31 06:54:16
UBS
The acquired Credit Suisse clients continue to withdraw their money from UBS.
(Photo: Reuters)
Zurich UBS CEO Sergio Ermotti is making the most far-reaching decision since the emergency takeover of smaller rival Credit Suisse in March. The institute also integrates the Swiss business of Credit Suisse, as announced by UBS on Thursday.
“Full integration is the best solution for UBS, our stakeholders and the Swiss economy,” the statement said. Politicians and the general Swiss public had hoped for a spin-off from CS Switzerland, for example via an IPO, to ensure competition and avoid a concentration of risk for the small country.
Even if UBS did not provide any information on this, thousands of jobs are likely to be lost in connection with the integration. The group raised the savings target. By the end of 2026, UBS wants to reduce gross costs by over ten billion dollars. So far, the world’s second largest asset manager for wealthy private customers had targeted over eight billion dollars. The integration-related expenses are likely to be largely offset by value-added effects of around twelve billion dollars.
Emergency takeover ensures record profit
The emergency takeover of Credit Suisse gave UBS a record profit in the second quarter. The bottom line is that the major Swiss bank earned $ 29 billion on Thursday, after $ 2.1 billion in the same period last year.
The driver was a book profit (“badwill”) from the transaction, because the purchase price was only a fraction of Credit Suisse equity. For the current quarter, the group expects an adjusted pre-tax result around the breakeven point, in the entire second half of the year an adjusted pre-tax profit should then be generated. By the end of 2026, UBS is aiming for a cost/income ratio of less than 70 percent (Q2: 88.9 percent) and a return on Common Equity Tier 1 capital of 15 percent.
Nevertheless, the clients taken over by Credit Suisse are withdrawing billions from UBS. In the period from April to June, customers withdrew 39.2 billion francs net, as the institute, which is about to be integrated into the UBS group, announced on Thursday. Assets under management melted to 1.213 trillion Swiss francs combined from 1.253 trillion at the end of March. The bottom line was a net loss from deposits of 9.3 billion Swiss francs in the second quarter.
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