Quiver Quantitative - UBS (UBS) achieved a record net profit of $29 billion in the recent quarter, post the integration of Credit Suisse (SIX:CSGN) (CS)into its portfolio. This major financial leap was a result of UBS procuring Credit Suisse at a discounted price, leading to a significant accounting gain. UBS announced its decision to retain Credit Suisse’s substantial domestic operation in Switzerland and reported consistent inflows from affluent clients, undeterred by the merger. The bank also indicated a sharp spike in its share value, which surged by 6%, marking its highest since the 2008 Swiss government bailout. This merger has fortified UBS’s position in overseeing the assets of the global elite, with the bank now managing approximately $5.5 trillion in client-invested assets.
The acquisition of Credit Suisse was steered by the Swiss government in March, positioning UBS at the helm of a majority of Switzerland’s lending and deposits. Rich clientele contributed a net $16 billion in new assets to UBS in Q2, providing a cushion against the outflow from Credit Suisse. The latter had returned nearly $239 billion to its customers since the previous October. The constant scrutiny of these inflows and outflows aims to predict the future financial prowess of UBS.
UBS resolved to assimilate Credit Suisse’s Swiss bank; a decision influenced by Swiss politicians advocating the existence of two prominent lenders in the country. Prior to the merger, both banks collectively employed around 37,000 individuals in Switzerland. UBS’s CEO, Sergio Ermotti, unveiled plans to cut approximately 3,000 jobs, with a major chunk of the reduction arising from employee attrition, while the specifics regarding international job cuts remain undisclosed. Both financial entities possess extensive bases in London and New York.
UBS has set a tentative timeline to conclude the integration by the end of 2026, anticipating a saving of $10 billion through job eliminations and system unifications. The bank intends to retain the Credit Suisse brand within Switzerland during the merger of the two domestic banks, expected to be finalized by 2025. However, the fate of the Credit Suisse brand post this period remains uncertain. This acquisition stands as the most substantial union of financial institutions since the financial meltdown and further amplifies UBS’s prominence in managing global wealth.
This article was originally published on Quiver Quantitative