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UBS Provides The First Look At The New Group Following The Acquisition By Credit Suisse

UBS Provides The First Look At The New Group Following The Acquisition By Credit Suisse
On August 31, UBS will release its first earnings report following a hastily planned acquisition of its Swiss rival Credit Suisse, providing fresh insight into the deal's effects and the operations of the new banking behemoth.
Investors will be closely examining any further information for hints on how the biggest banking rescue since the global financial crisis is developing, aside from its second quarter statistics, which were delayed by more than a month due to the deal's complexity.
On Thursday, these are the things that experts and investors will be watching for:
A separate disclosure for Credit Suisse will be included in UBS's results, providing a more thorough summary of the issues that Credit Suisse has since assigned to UBS.
The data will demonstrate the magnitude of the harm done to Credit Suisse's reputation among clients, particularly to its struggling wealth management division, following the bank's rescue, which was orchestrated over a weekend in March by Swiss authorities.
Credit Suisse has previously stated that it anticipates recording a significant loss in 2023.Outflows, or customers withdrawing money from the bank, are anticipated to have continued in April to June despite the bailout, demonstrating the long-lasting harm to customer confidence in the institution.
As a result, the subsidiary's managed assets, which stood at 500 billion Swiss francs at the end of March, will decrease even further.
To spread their financial risks across both institutions, wealthy clients frequently maintained accounts at both UBS and Credit Suisse.
Some may now choose to spread their risk by moving a portion of their funds to another location.
UBS had previously recorded substantial inflows as a result of Credit Suisse clients looking for safer substitutes.
That effect might now be reversed as a result of the merger, according to banking analysts. Benjamin Goy, an analyst at Deutsche Bank, said that over time, there may be outflows of up to 100 billion Swiss francs.
This week's results will indicate whether or not this change has already begun.
The "crown jewel" of Credit Suisse, its Swiss branch, is being closely watched by many bank observers.
Sergio Ermotti, CEO of UBS, has pledged to make a choice by the end of the summer. Analysts anticipate a statement this week.
The Swiss company might be spun off or floated, as well as fully integrated, which Ermotti has stated is likely but is unpopular in Switzerland. Politicians in Switzerland who are running for office have come out against the idea, saying they fear it will lead to the elimination of thousands of jobs.
UBS, however, could be able to withstand this pressure after announcing it would not use the financial assurances provided by the government to make the purchase happen, absolving taxpayers of any liability.
When it first announced the acquisition in March, UBS stated that it expected to save more than $8 billion in costs, 75% of which would come from reducing the bank's workforce, which increased to 120,000 as a result of the merger.
Analysts predict that UBS will eliminate between 30,000 and 35,000 employees, or approximately a third of the combined group's global staff.
Up to 10,000 employment could be impacted by a complete integration of Credit Suisse's domestic unit in Switzerland alone.
The statistics on Thursday should demonstrate how much the workforce of Credit Suisse, which was 48,000 at the end of March, has already decreased. Although the majority of staff exits have been voluntary thus far, bankers are preparing for waves of layoffs.
According to a survey done by the Swiss bank, analysts anticipate UBS to announce a net profit of $33.45 billion for the second quarter.
The enormous sum is mostly attributable to a one-time boost to earnings from UBS's acquisition of Credit Suisse for a small portion of its market value.
Analysts dismiss it as an illustration of how a complicated merger can skew the facts and claim that they will be focusing on other issues instead.
"We will be focusing more on the size, speed and scale of the restructuring programme," Keefe, Bruyette & Woods analyst Thomas Hallett said.
The non-core entity, a collection of undesired Credit Suisse assets that consists of loans, legacy assets, and structured instruments, is likely to receive more information from UBS.
However, there isn't much known about this entity, and analysts are interested in learning more about how big this portfolio is, how long it will take to wind down, and what the costs are.

Christopher J. Mitchell

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