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.
Venezuela has accused Donald Trump of a “colonial threat” after he said the airspace “above and surrounding” the country should be considered closed “in its entirety”.
Mr Trumpmade the declaration amid growing tensions with President Maduro – and as the US continues attacking boats it claims are carrying drugs from Venezuela.
He wrote on Truth Social: “To all Airlines, Pilots, Drug Dealers, and Human Traffickers, please consider THE AIRSPACE ABOVE AND SURROUNDING VENEZUELA TO BE CLOSED IN ITS ENTIRETY.”
Image: Air traffic above Venezuela on Saturday afternoon. Pic: FlightRadar24
Venezuela’s foreign affairs office called it a “colonial threat” and “illegal, and unjustified aggression”.
It accused the president of threatening “the sovereignty of the national airspace… and the full sovereignty of the Venezuelan state”.
President Trump’s words were part of a “permanent policy of aggression against our country” that breached international law and the UN Charter, it added.
The Pentagon and the White House have so far not given any additional detail on the president’s statement.
Mr Trump’s post comes after the American aviation regulator last week warned of a “potentially hazardous situation” over Venezuela due to a “worsening security situation”.
Image: Nicolas Maduro is widely considered a dictator by the West. Pic: Reuters
The South American nation revoked operating rights for six major airlines that went on to suspend flights to the country.
Mr Trump warned a few days ago that land operations against suspected Venezuelan drug traffickers would begin “very soon”.
Such a move would be a major escalation in Operation Southern Spear – the US naval deployment in the Caribbean Sea and eastern Pacific that’s so far attacked at least 21 vessels.
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0:59
Three killed as US strikes another alleged drug boat
Venezuela has said the attacks, which have killed more than 80 people, amount to murder.
The US has released videos of boats being targeted, but hasn’t provided evidence – such as photos of their cargo – to support the smuggling claims.
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1:41
Venezuela claims Trump creating ‘fables’ to justify ‘war’
The Pentagon has sought to justify the strikes by labelling the drug gangs as “foreign terrorist organisations” – putting them on par with the likes of al Qaeda.
It claims the boats targeted are carrying drugs bound for the US, although Sky’s chief correspondent says the final destination is likely to be Europe and West Africa.
President Maduro has denied Mr Trump’s claims he is involved in the drugs trade himself and said his counterpart wants to oust him so he can install a more sympathetic government.
Venezuelan officials have also claimed Mr Trump’s true motivation is access to the country’s plentiful oil reserves.
Mr Maduro is widely considered a dictator who’s cheated elections and has been president since 2013.
Venezuela has accused Donald Trump of a “colonial threat” after he said the airspace “above and surrounding” the country should be considered closed “in its entirety”.
Mr Trumpmade the declaration amid growing tensions with President Maduro – and as the US continues attacking boats it claims are carrying drugs from Venezuela.
He wrote on Truth Social: “To all Airlines, Pilots, Drug Dealers, and Human Traffickers, please consider THE AIRSPACE ABOVE AND SURROUNDING VENEZUELA TO BE CLOSED IN ITS ENTIRETY.”
Image: Air traffic above Venezuela on Saturday afternoon. Pic: FlightRadar24
Venezuela’s foreign affairs office called it a “colonial threat” and “illegal, and unjustified aggression”.
It accused the president of threatening “the sovereignty of the national airspace… and the full sovereignty of the Venezuelan state”.
President Trump’s words were part of a “permanent policy of aggression against our country” that breached international law and the UN Charter, it added.
The Pentagon and the White House have so far not given any additional detail on the president’s statement.
Mr Trump’s post comes after the American aviation regulator last week warned of a “potentially hazardous situation” over Venezuela due to a “worsening security situation”.
Image: Nicolas Maduro is widely considered a dictator by the West. Pic: Reuters
The South American nation revoked operating rights for six major airlines that went on to suspend flights to the country.
Mr Trump warned a few days ago that land operations against suspected Venezuelan drug traffickers would begin “very soon”.
Such a move would be a major escalation in Operation Southern Spear – the US naval deployment in the Caribbean Sea and eastern Pacific that’s so far attacked at least 21 vessels.
Please use Chrome browser for a more accessible video player
0:59
Three killed as US strikes another alleged drug boat
Venezuela has said the attacks, which have killed more than 80 people, amount to murder.
The US has released videos of boats being targeted, but hasn’t provided evidence – such as photos of their cargo – to support the smuggling claims.
Please use Chrome browser for a more accessible video player
1:41
Venezuela claims Trump creating ‘fables’ to justify ‘war’
The Pentagon has sought to justify the strikes by labelling the drug gangs as “foreign terrorist organisations” – putting them on par with the likes of al Qaeda.
It claims the boats targeted are carrying drugs bound for the US, although Sky’s chief correspondent says the final destination is likely to be Europe and West Africa.
President Maduro has denied Mr Trump’s claims he is involved in the drugs trade himself and said his counterpart wants to oust him so he can install a more sympathetic government.
Venezuelan officials have also claimed Mr Trump’s true motivation is access to the country’s plentiful oil reserves.
Mr Maduro is widely considered a dictator who’s cheated elections and has been president since 2013.
A disgraced surgeon accused of harming patients is unlikely to ever return from Libya to face justice, a lawyer familiar with the country’s legal system has told Sky News.
Former NHS Tayside neurosurgeon Sam Eljamel is originally from Libya and is believed to be operating there now.
Suspended from his work at a hospital in Dundee in 2013, Eljamel is accused by dozens of former patients of carrying out life-changing “botched” brain and spinal operations. The claims include removing the wrong body parts.
Image: Sam Eljamel. Pic: DC Thomson & Co Ltd
A public inquiry is under way and Police Scotland is examining up to 200 patient cases as part of an ongoing criminal investigation.
‘Paralysed by my surgeon’
Annemarie Pymm, a former tax worker, lives in Perth with her husband Dougie. She is paralysed and can barely speak after undergoing two brain operations by Eljamel to remove cancer and requires 24/7 care.
Sitting next to his wife, Mr Pymm told Sky News: “She can’t walk. She can’t talk. She can’t do anything for herself.”
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Image: Annemarie Pymm with her husband Dougie
The Pymms are part of a growing group of families who are demanding answers and accountability.
“Professor Eljamel… Do you know what he has done to my wife and 200 other people? He mutilated them,” Dougie said.
Eljamel was head of neurosurgery at NHS Tayside from 1995 to 2013. He was lauded as one of Europe’s leading brain surgeons and boasted a CV that was pages long.
When allegations of malpractice first emerged, NHS bosses allowed the surgeon to operate on a further 111 patients unsupervised despite being under clinical supervision.
Health chiefs have since admitted patients were put at unnecessary risk.
Image: Protesters outside the Scottish Parliament asking for a public inquiry into the care given to patients by Eljamel. Pic: PA
His final NHS patient: ‘I sued and won’
One of those patients was Jules Rose, who is now the lead campaigner in this scandal.
Medical notes reveal Ms Rose, who lives in Kinross, had a tear gland removed instead of a brain tumour during Eljamel’s last ever surgery on Scottish soil.
She was unaware he was under investigation at the time and has since won a successful lawsuit against the NHS.
Image: Jules Rose
She said: “Where were the checks and balances in all of this? Where were the systemic processes that Eljamel should have been going through?”
The former marathon runner describes Eljamel as a “butcher” who has destroyed her life.
Sky News contacted the hospital in Misrata, Libya, where Eljamel is thought to be employed. An employee confirmed he works there almost every day but declined our request to speak directly to him.
Image: A campaigner outside the Scottish Parliament in February. Pic: PA
Will Eljamel ever be extradited to UK?
A formal extradition treaty exists between the UK and Libya, allowing Libyan nationals to be sent back to Britain in certain criminal circumstances.
Professor Peter Watson is a senior lawyer who represented British families in the decades-long diplomatic and legal battle with Libya over the Lockerbie bombing, the UK’s worst-ever terror attack.
All passengers and crew on board Pan Am flight 103 were killed when the plane exploded over the Scottish town in 1988.
The subsequent investigation, involving Mr Watson, centred on discussions with authorities in Libya after various Libyan nationals were accused of the terror attack.
Sky News visited him to ask him, with his knowledge of how the system operates there, his views on the prospect of Eljamel being brought back to Scotland to face any formal charges, if any were brought forward.
Image: Professor Peter Watson speaks to Sky’s Connor Gillies
Mr Watson told Sky News: “I think the challenge is probably too big. The steps that Crown Office and the police would be required to take would require the cooperation and agreement of the Libyan authorities. It is difficult to see how that would happen.”
He concluded: “Libya is a country in turmoil. Various factions are fighting to take control of various parts. You’d have to persuade the Libyan authorities that it was in the interests of their citizens and of Libya for this process to take place.”
Image: A protester’s sign outside the Scottish Parliament in 2023. Pic: PA
Public inquiry gets under way
In 2021, a Scottish court ordered Dr Eljamel to pay a former patient £2.8m in compensation after a judge ruled the surgeon was entirely to blame for leaving a woman with serious disabilities.
A judge-led independent public inquiry examining what went wrong is now under way in Edinburgh.
It is examining, among other areas, failures including a lack of effective systems to pick up on recurrent mistakes by surgeons during Eljamel’s tenure in Scotland.
Earlier this week, it emerged that 40 hard copy theatre logbooks containing information on surgeries carried out by Eljamel between 1995 and 2013 had been destroyed.
They were wrecked in July this year despite a formal “Do Not Destroy” order being in place for the inquiry.
NHS Tayside has apologised and said it will fully comply with the investigations and inquiries.