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UBS Group AG expects a financial hit of about $17 billion from the takeover of Credit Suisse Group AG, the bank said in a regulatory presentation as it prepares to complete the rescue of its struggling Swiss rival.

UBS estimates a negative impact of $13 billion from fair value adjustments of the combined group’s assets and liabilities.

It also sees $4 billion in potential litigation and regulatory costs stemming from outflows.

UBS, however, also 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.

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.

UBS said the estimates were preliminary and the numbers could change materially later on.

It also said it might book restructuring provisions after that, but offered no numbers. Union Bank of Switzerland said it estimates a negative impact of $13 billion from fair value adjustments of the combined group’s assets and liabilities. AFP via Getty Images

“The financial information lacks an estimate of restructuring provisions as these will be booked after the transaction closes,” Vontobel analyst Andreas Venditti said in a note.

Analysts at Jefferies have estimated restructuring costs, litigation provisions and the planned winding down of the non-core unit could total $28 billion.

Meanwhile, UBS has implemented a number of restrictions on Credit Suisse while the takeover is underway.

In certain cases, Credit Suisse cannot grant a new credit facility or credit line exceeding $113 million to investment-grade borrowers or more than 50 million francs to non-investment-grade borrowers, a UBS filing showed. Union Bank of Switzerland implemented a number of restrictions on Credit Suisse while the takeover is underway.Getty Images

“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

“Ultimately, from UBS’ perspective, they will have to wear these risks on their books.”

Credit Suisse also cannot undertake capital expenses of more than 10 million francs as part of the restrictions or enter into certain contracts worth more than 3 million francs per year.

The filing shows Credit Suisse cannot order any “material amendments” to its employee terms and conditions, including remuneration and pension entitlements, till deal closure.

The restrictions “will cause certain clients to leave Credit Suisse” but may not accelerate the pace of outflows already seen, said Quinlan, following UBS’ statement last week that Credit Suisse had already stemmed asset outflows. RUSHED INTO DEAL

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 worsened. The filing shows Credit Suisse cannot order any “material amendments” to its employee terms and conditions. AFP via Getty Images

UBS agreed in March to buy Credit Suisse for $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, in a shotgun merger engineered by Swiss authorities over a weekend amid a global banking turmoil. Start your day with all you need to know

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The deal, the first rescue of a global bank since the 2008 financial crisis, will create a wealth manager with more than $5 trillion in invested assets and over 120,000 employees globally.

The Swiss state is backing the deal with up to 250 billion Swiss francs in public funds.

Switzerland’s government is providing a guarantee of up to 9 billion francs for further potential losses on a clearly defined part of Credit Suisse portfolio.

UBS signaled no quick turnaround for the 167-year-old Credit Suisse, which came to the brink of collapse during the recent banking sector turmoil after years of scandals and losses.

It said it expected both the Credit Suisse group and its investment bank to report substantial pre-tax losses in the second quarter and the whole of this year.

Following the legal closing of the transaction, UBS Group AG plans to manage two separate parent companies UBS AG and Credit Suisse AG, UBS said last week.

It has said the integration process could take three to four years.

During that time, each institution will continue to have its own subsidiaries and branches, serve its clients and deal with counter-parties.

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World

German election: Voting under way after campaign focused on economy and migration

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German election: Voting under way after campaign focused on economy and migration

Voters are heading to the polls in Germany’s general election.

They are electing a new parliament after a campaign focused on the state of Europe’s biggest economy and calls to restrict migration.

The vote also comes at a time of fragile relations between Europe and the US over Ukraine’s future in its war with Russia.

Chancellor Olaf Scholz lost a confidence vote in parliament last December, paving the way for an early election.

Chancellor Olaf Scholz attends the final Social Democratic Party (SPD) rally in Potsdam. Pic: Reuters
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Chancellor Olaf Scholz attends the final Social Democratic Party (SPD) rally in Potsdam. Pic: Reuters

Mr Scholz, leader of Germany’s centre-left Social Democrats (SPD), had governed as the head of a fractious three-party coalition until it collapsed the previous month when he sacked his finance minister.

He had weeks of disputes with Christian Lindner over how to kickstart Germany’s stagnant economy.

Mr Lindner and his colleagues in the Free Democrats Party (FDP) promptly quit the coalition, leaving the SPD and their remaining partner, the Greens, without a majority in parliament.

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Germany’s constitution does not allow the Bundestag to dissolve itself, so a confidence vote was needed to set in motion the early election, which is being held seven months ahead of schedule.

Friedrich Merz, leader of the Christian Democratic Union (CDU) party, at a rally in Munich. Pic: Reuters
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Friedrich Merz, leader of the Christian Democratic Union (CDU) party, at a rally in Munich. Pic: Reuters

Opposition leader Friedrich Merz, of the Christian Democratic Union (CDU) party, has vowed to revive the stagnant economy and defend Europe’s interests in the face of a confrontational White House.

The far-right, anti-immigration Alternative for Germany is looking to make gains – but has no other party willing to go into government with it.

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World

Pope had ‘tranquil’ night in hospital, Vatican says

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Pope had 'tranquil' night in hospital, Vatican says

Pope Francis had a “tranquil” night and rested in hospital, the Vatican has said.

Unlike previous updates since the Pope was admitted to hospital on 14 February, the Vatican didn’t say whether he had gotten up or had breakfast.

The 88-year-old has been in hospital for more than a week as he receives treatment for double pneumonia and chronic bronchitis.

On Saturday night, the Vatican said the Pope was in a critical condition after a “prolonged respiratory crisis” that required a high-flow of oxygen.

He also had blood transfusions after tests revealed thrombocytopenia, which is associated with anaemia.

Doctors said the prognosis was “reserved”.

In an update earlier on Saturday morning, the Vatican said he will not lead Sunday prayers for the second week running, adding: “The Pope rested well.”

Francis, who has been leading the Catholic Church since 2013, is likely to prepare a written homily for someone else to read at Sunday’s Angelus.

Millions of people around the world have been concerned about the Pope’s increasingly frail health – and his condition has given rise to speculation over a possible resignation, which the Vatican has not commented on.

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‘The Pope is like family to us’

Doctors on Friday said he was “not out of danger” and was expected to remain at Rome’s Gemelli hospital for at least another week.

Sergio Alfieri, the chief of the pontiff’s medical team, said: “Is he out of danger? No. But if the question is ‘is he in danger of death’, the answer is ‘no’.”

Doctors warned that while he did not have sepsis – where germs enter the bloodstream – there was always a risk the infection could spread in his body, and they said that was the biggest concern.

Sepsis is a complication of an infection that can lead to organ failure and death.

Pope Francis has a history of respiratory illness, having lost part of one of his lungs to pleurisy as a young man.

He had an acute case of pneumonia in 2023.

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Entertainment

IT Crowd’s Chris O’Dowd on aliens, returning to a ‘broke’ and ‘down’ London, and his new show Small Town, Big Story

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IT Crowd's Chris O'Dowd on aliens, returning to a 'broke' and 'down' London, and his new show Small Town, Big Story

Actor and comedian Chris O’Dowd has described moving back to London from the US, finding people in the city are “down” after a decade of cutbacks.

The IT Crowd star returned to London from Los Angeles with his wife Dawn O’Porter and their two children a year ago.

“It’s just gone through 10 years of austerity, and you can feel it off it,” he told Sky News.

“People are down, is the impression I’m getting. I don’t know if it’s because of the divisive political culture or whether it’s because people are broke as s**t because they haven’t put any money into public services for so long, and now they’ve said they’re not going to do it either because they’re not going to raise taxes, so I don’t know what they’re going to do. But everybody is… it would be hard to say it’s improved.”

Asked if he sensed any optimism that things would change for the better, he replied: “Not yet.”

O’Dowd said the decision to return to the UK “wasn’t because Trump got in or any of that crap”, but that he wanted to “get out before the political cycle starts, because it just gets a bit heated”. He added: “It actually didn’t this time, because he won so easily.”

The Irish star was speaking ahead of the premiere of his new Sky Original series Small Town, Big Story, which comes to Sky and NOW on Thursday 27 February.

Chris O'Dowd and Christina Hendricks in Small Town, Big Story
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Chris O’Dowd and Christina Hendricks in Small Town, Big Story

Set in the fictional Irish border village of Drumban, the dramatic comedy follows Wendy Patterson, portrayed by Mad Men’s Christina Hendricks, a local girl who found success as a TV producer in Los Angeles. She returns with a film crew in tow and is forced to confront a secret from decades ago – visitors from outer space.

So does the show’s creator believe in alien existence?

“I find it hard to believe we’re it, we’re just too imperfect,” O’Dowd replied. He hails from Boyle, County Roscommon, which is considered a “UFO hotspot” in Ireland.

“In the vastness of the universe, or the multiverse or whatever we’re existing within, it seems highly unlikely that you and me are the best we can do, no offence,” he added.

The cast of Small Town, Big Story
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The cast of Small Town, Big Story

Patterson’s show-within-a-show, titled I Am Celt but described as Lame Of Thrones, appears to satirise Hollywood’s often inaccurate portrayal of Ireland.

“Some of them can be heavy-handed, or a little bit off-piste,” laughs O’Dowd. “I think the thing to remember is we’re guilty of it too.

“Whenever I hear Americans being depicted from Irish people, very often they’re stuffing themselves with cheeseburgers and they’re morons. There’s got to be a bit of give and take with that.”

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