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.
Before the service, Mr Trump was also seen shaking hands with former vice president Mike Pence – the first time the pair have been seen in public together since leaving the White House in 2021.
Prior to that, Mr Pence had refused to back Mr Trump’s claim he had won the 2020 election.
Mr Obama and Mr Trump were also seen talking before the service began.
During his eulogy, Mr Biden said Mr Carter taught him the importance of treating “everyone with dignity and respect.”
“To young people, to anyone in search of meaning and purpose, study the power of Jimmy Carter’s example,” the president said. “Character, faith, love – a true patriot.”
Joshua Carter, the former president’s grandson, also said at the service: “He built houses for people who needed homes.
“He eliminated diseases in forgotten places. He waged peace anywhere in the world, wherever he saw a chance. He loved people.”
From 4 January, Mr Carter’s body was carried by a motorcade through Plains, before heading to the Carter Presidential Center in Atlanta.
The former president’s remains were then flown to Maryland and transferred in a ceremony to a hearse, which was carried in a motorcade to the US Navy Memorial in Washington to honour Mr Carter’s service as a lieutenant in the Navy.
He has since been lying in state at the Capitol Building, where the public could pay respects from Tuesday evening through to Thursday morning
Mr Carter’s body will now be returned to his hometown in Georgia for a second service and burial.
There, a private ceremony will be held at Maranatha Baptist Church before another procession through Plains, where supporters are being encouraged to line the streets for the motorcade.
Mr Carter will then be buried on his property next to his late wife, Rosalynn, who died in 2023.
Hollywood celebrities are among thousands of people who have been evacuated in Los Angeles, some fleeing homes now burned to the ground.
Paris Hilton and actor Billy Crystal have both lost their houses as fires rip through parts of California, including exclusive suburbs home to film stars and billionaires.
Oscar-winning songwriter Diane Warren, talk show host Ricki Lake, actor Cary Elwes, and reality stars Spencer Pratt and Heidi Montag have also confirmed their homes have been destroyed.
US media is reporting that Eugene Levy, and Adam Brody and Leighton Meester, have lost their homes. The stars are yet to confirm this.
Sky News’ US correspondent Martha Kelner reported that Tom Hanks, Ben Affleck and Reese Witherspoon were among those evacuated.
The blaze in Pacific Palisades, a hillside area between Santa Monica and Malibu dotted with celebrity homes, is one of at least five raging in California.
Thousands of firefighters are trying to contain the flames, with a new fire breaking out overnight in the Hollywood Hills, threatening a host of tourist sites including the Walk Of Fame.
‘The loss is overwhelming’
Hilton said she was “heartbroken beyond words” to see her Malibu home, where she has brought up her young children Phoenix and London, “burn to the ground on live TV”.
In a post on social media, she said: “This home was where we built so many precious memories. It’s where Phoenix took his first steps and where we dreamed of building a lifetime of memories with London.
“While the loss is overwhelming, I’m holding onto gratitude that my family and pets are safe.”
Instagram
This content is provided by Instagram, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Instagram cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Instagram cookies.
To view this content you can use the button below to allow Instagram cookies for this session only.
In a joint statement, US actor Crystal, known for films including When Harry Met Sally and Analyze This, and his wife Janice confirmed their home of 46 years was gone.
“Words cannot describe the enormity of the devastation we are witnessing and experiencing,” the couple said.
They added: “We raised our children and grandchildren here. Every inch of our house was filled with love. Beautiful memories that can’t be taken away.”
The Hills stars Pratt and Montag documented the escalation of the fire at their home on Snapchat, with Pratt saying: “I’m watching our house burn down on the security cameras.”
“I talked to my neighbour last night and she told me that [Palisades Charter High School] had burnt down, and that’s directly behind me, and so had Gelson’s Supermarket which is adjacent,” she said.
“I just can’t reach anyone to see if my house is okay. I just Googled it and it said that it’s destroyed and terrible… I don’t know if my house is there.”
Jamie Lee Curtis confirmed her home was safe but said “our beloved neighbourhood is gone” as she shared videos of the blaze on her Instagram.
Instagram
This content is provided by Instagram, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Instagram cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Instagram cookies.
To view this content you can use the button below to allow Instagram cookies for this session only.
Writer and actor Steve Guttenberg told Sky News he witnessed panic attacks and despair as he tried to help residents as the flames closed in.
The Police Academy star said: “There were mothers trying to find their kids.
“There were panic attacks. It was terrible. And that’s when the fires just lit up.”
Please use Chrome browser for a more accessible video player
8:50
Guttenberg calls on national guard
Other celebrities who have fled their properties include the award-winning actor James Woods, who said he had been safely evacuated from his home in Pacific Palisades.
But he added in a post on X: “I do not know at this moment if our home is still standing.”
X
This content is provided by X, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable X cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to X cookies.
To view this content you can use the button below to allow X cookies for this session only.
Actor Mark Hamill, best known for playing Luke Skywalker in the Star Wars films, also posted on social media on Wednesday saying he evacuated his home in Malibu and his family were “fleeing for our lives”.
Instagram
This content is provided by Instagram, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Instagram cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Instagram cookies.
To view this content you can use the button below to allow Instagram cookies for this session only.
This Is Us actress Mandy Moore was also forced to leave her home with her children and pets, saying on Instagram they had found temporary refuge with friends.
The actress said: “Trying to shield the kids from the immense sadness and worry I feel.
“Praying for everyone in our beautiful city. So gutted for the destruction and loss. Don’t know if our place made it.”
According to Velvet Ropes, which maps celebrity properties, Matt Damon, Steven Spielberg, Hilary Swank and Sally Field all have homes close to where fires are raging.
Dr Dre, Tyra Banks, Martin Short, Anna Faris, Milo Ventimiglia, Linda Cardellini, Mary McDonnell, Adam Sandler, Miles Teller, and Jennifer Love Hewitt are also said to have houses in affected areas.
In neighbouring Malibu, which was also affected by fires in December, stars including Beyonce and Jay-Z, Kim Kardashian, Lady Gaga and Billie Eilish are said to be among the celebrity residents.
The Palisades blaze has already burnt through nearly 16,000 acres of land, while the Eaton fire, covering over 10,000 acres, has caused the death of five people.
Three other fires, the Hurst fire, Lidia fire and Sunset fire, are all raging as emergency services battle to bring them under control.
At least five people have died in a wildfire in Los Angeles, officials have said, with firefighters now facing new blazes, including one in the city’s famous Hollywood Hills.
With firefighters struggling to bring the blazes under control due to strong winds and dry conditions, more than 130,000 people across the wider Los Angeles area are now under evacuation orders.
The new evacuation areas include parts of the Hollywood Hills, where a new fire, dubbed the Sunset Fire, broke out on Wednesday, as well as parts of Santa Monica – famous for its pier.
Los Angeles Fire Department chief Kristin Crowley said on Wednesday that the largest of the fires, the Pacific Palisades blaze to the west of downtown Los Angeles, was now over 15,800 acres “and growing”.
Meanwhile, firefighters continue to battle the Hurst Fire, to the north, now at 700 acres, while firefighters from the Los Angeles County continue to battle the Eaton Fire, near to the city of Pasadena, as well as a new blaze near Acton.
Los Angeles County fire chief Anthony Marrone said the five people who were killed all died in the Eaton fire.
At a news conference, Los Angeles’ chief of police James McDonnell told reporters: “This is a tragic time in our history here in Los Angeles, but a time where we’re really tested and see who we really are.
“It’s critical that at these times we be patient, that we come together, that we focus on saving lives and to be able to the very best job we can.”
He then urged those under evacuation orders to take them “very seriously”, saying they make “the difference between living and not”.
The fires have torn across significant swathes of the city, fanned by high winds.
Los Angeles mayor, Karen Bass, said on Wednesday: “As we head into tonight, we are still facing strong and erratic winds.
“In Palisades and Sylmar (Hurst), we are very much in an active firefight.”
However, she said that the Woodley Fire in the Sepulveda Basin was now under control.
Please use Chrome browser for a more accessible video player
2:41
LA Fires: ‘Do you owe citizens an apology?’
Among the areas affected by the fires are neighbourhoods known to be popular with celebrities and wealthy residents.
A number of celebrities are reported to have lost their homes in the fires, including socialite Paris Hilton, who shared the news on the X social media platform.
She wrote: “Sitting with my family, watching the news, and seeing our home in Malibu burn to the ground on live TV is something no one should ever have to experience.
“This home was where we built so many precious memories. It’s where Phoenix [her son] took his first steps and where we dreamed of building a lifetime of memories with London [her daughter].”
“While the loss is overwhelming, I’m holding onto gratitude that my family is safe. My heart and prayers are going out to every family affected by these fires.”
Wall Street giant JP Morgan has also said preliminary estimates suggest insured losses from the wildfires could approach $10bn (around £8bn).
Meanwhile, officials said on Wednesday that three people had been arrested for allegedly looting within the evacuation areas.
He faced criticism, including from president-elect Donald Trump, over claims that firefighters did not have enough water in their fire hydrants.
Sky News’s US correspondent Martha Kelner attempted to quiz Mr Newsom on the claims but did not receive a response, while correspondent David Blevins also attempted to put the question to mayor, Ms Bass, but received no response.
Please use Chrome browser for a more accessible video player
0:15
Sky correspondent challenges governor over empty hydrants
Meanwhile, President Joe Biden has been briefed on the fires while in the state to announce the creation of two new national monuments.
He will miss his trip to the Vatican to meet The Pope in order to remain in Washington to help coordinate the White House’s response to the fires.