UBS flags $17 billion hit from Credit Suisse takeover

Published

2 years ago

May 17, 2023

admin

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

Morning Report delivers the latest news, videos, photos and more. Enter your email address

Please provide a valid email address.

By clicking above you agree to the Terms of Use and Privacy Policy.

Thanks for signing up!
Never miss a story. Check out more newsletters

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.

Politics

Patrick Spencer: Suspended Tory MP denies sexually assaulting two women at private members’ club

Published

1 hour ago

June 16, 2025

admin

Patrick Spencer: Suspended Tory MP denies sexually assaulting two women at private members' club

An MP has denied two counts of sexual assault allegedly carried out at a private members’ club in central London.

Patrick Spencer, who represents Central Suffolk and North Ipswich, is accused of cupping the breasts of two women over their clothes at the Groucho Club in August 2023.

The 37-year-old confirmed his full name and date of birth before pleading not guilty to the offences at Westminster Magistrates’ Court.

Politics Hub: Starmer attends day two of G7 summit

He is due to appear at Southwark Crown Court on 14 July.

Spencer was suspended from the Conservative Party and had the whip withdrawn after the charges were brought.

The politician was first elected to parliament last year with a majority of 4,290.

Lawyers acting for the MP have previously said he “categorically denies the charges” and would defend against the allegations “robustly in court”.

The Groucho Club, on Dean Street, opened in 1985 and became a renowned meeting place for A-list celebrities and others, including actors, comedians and media executives.

The club was named after the comedian and actor Groucho Marx, who reportedly once said he would refuse to join any club that would have him as a member.

World

Israel had ‘no choice’ but to attack Iran because it was ‘rushing’ to nuclear bomb, president Isaac Herzog claims

Published

1 hour ago

June 16, 2025

admin

Israel had 'no choice' but to attack Iran because it was 'rushing' to nuclear bomb, president Isaac Herzog claims

Israel had “no other choice” but to attack Iran because it was proceeding “dramatically” towards a nuclear bomb, Israeli President Isaac Herzog has claimed.

Speaking to Sky News’ Yalda Hakim, he said Iran was “rushing” to the bomb “under disguise”.

He also suggested the Israeli war cabinet was discussing Iran’s Supreme Leader, Ayatollah Ali Khamenei, amid reports that President Donald Trump vetoed a plan to kill him.

It comes as Israel and Iran continue to fire missiles at each other after Israel launched an unprecedented strike on Iran’s nuclear and military capabilities.

Tehran has long denied that its nuclear program has been attempting to obtain a nuclear weapon.

Mr Herzog was asked why Israel attacked Iran when it did.

“When you take such decisions of historic magnitude and proportions, you have to analyse all facets and all facts,” he replied.

“The truth of the matter is there was no other choice.”

He claimed Iran was proceeding “dramatically” towards the bomb, both in terms of the enrichment of uranium and, “clandestinely”, the armament part of the process.

“I’ve always been very crystal clear with regards to a nuclear capability of our enemies – it has to be removed at once.”

Mr Herzog added: “We have to remove the Iranian nuclear program because we see the negotiating process as being futile because they are lying whilst talking to us.

“They are lying whilst talking to the United States and other allies.”

He was questioned whether the strikes on Iran’s nuclear infrastructure could provoke a response that causes a mass casualty event in Israel.

“(We are) very much aware of the risks of this war,” he replied. “Every night there are missile attacks, heavy missile attacks on Israel.

“We have our air defence systems, which are excellent.

“Unfortunately, we have casualties. Brothers and sisters of ours from toddlers all the way up to the age of 94.”

He continued: “No, we don’t accept it at all… That’s why we are fighting also, to eliminate their capability of firing at us.”

He also suggested the Israeli war cabinet was discussing Iran’s Supreme Leader Ayatollah Ali Khamenei, after reports Mr Trump vetoed an Israeli plan to kill him.

“Let’s just remember that the Supreme Leader of Iran has for years called for the annihilation of Israel.”

Environment

The new Hyundai IONIQ 6 has some seriously impressive range, more than the Kia EV4

Published

1 hour ago

June 16, 2025

admin

The new Hyundai IONIQ 6 has some seriously impressive range, more than the Kia EV4

Hyundai’s electric fastback is due for some major upgrades that could finally make it the Tesla Model 3 challenger it was designed to be. The new Hyundai IONIQ 6 is better than ever, featuring a stylish new look both inside and out, an NACS port for charging at Tesla Superchargers, and even more driving range than expected.

The new Hyundai IONIQ 6 is a long-range, stylish EV

It’s been just about three years since Hyundai unveiled the IONIQ 6 for the first time at the 2022 Busan International Motor Show.

Hyundai’s “electrified streamliner” arrived as what was expected to be a genuine rival to the Tesla Model 3, boasting over 350 miles of driving range, fast charging in under 20 minutes, and an affordable price tag.

Despite this, the electric sedan has failed to live up to its hype. In the US, IONIQ 6 sales fell 6% last year, with only 12,264 units sold. According to Cox Automotive, Tesla sold 189,903 Model 3s in the US last year, a decrease from 2023, partly due to the launch of the refreshed model.

Advertisement – scroll for more content

With the upgraded IONIQ due out later this year, Hyundai’s EV might finally match the Model 3 as another long-range, fast-charging, affordable electric sedan.

The new Hyundai IONIQ 6 has just become Korea’s longest-range electric sedan. It was officially certified by the Ministry of Environment with a range of up to 568 km (353 miles), surpassing the Kia EV4 at 549 km (341 miles).

On the WLTP scale, that could translate to nearly 700 km (430 miles) range. The current IONIQ 6 is rated with a WLTP range of up to 614 km (382 miles).

For those in the US, the 2025 Hyundai IONIQ 6 already provides an EPA-estimated range of up to 342 miles. The new model is expected to achieve a range of over 350 miles.

The new IONIQ 6 features an upgraded 84 kWh battery, similar to the 2025 IONIQ 5, providing increased driving range. Hyundai’s new IONIQ 5 is now rated with an EPA-estimated driving range of 318 miles, up from 303 miles in the 2024 model.

Like the IONIQ 5 refresh, the new IONIQ 6 is expected to arrive with a built-in NACS port, allowing access to Tesla Superchargers.

Hyundai unveiled the new IONIQ 6 design at the Seoul Mobility Show in April, saying it “enhanced every line and detail to make the IONIQ 6 simpler and more progressive.” And last week, Hyundai teased a sporty “N” line mode coming soon. We got a sneak peek of it in public a few days later after it was spotted driving in Korea. You can tell, it’s already shaping up to be a significant upgrade.

As for prices and final specs, we’ll have to wait until closer to launch later this year. Check back soon for more info. We’ll keep you updated with the latest.

Will Hyundai’s electric sedan finally compete with the Model 3? Let us know your thoughts in the comments below.

Source: Yucca Post Korea

FTC: We use income earning auto affiliate links. More.