UBS is about to publish second-quarter earnings on Thursday, the primary extremely anticipated outcomes on the efficiency of Switzerland’s largest financial institution after it acquired rival Credit score Suisse in a blockbuster deal that rocked the Swiss banking sector earlier this 12 months.
A lot consideration might be paid to layoff plans and the destiny of Credit score Suisse’s Swiss division, which has been surrounded by a lot hypothesis in current months.
Swiss authorities pushed UBS right into a $3.25 billion takeover on March 19, 2023 to forestall its closest competitor from collapsing, fearing catastrophic penalties for the worldwide monetary system.
However because the complicated merger was accomplished in June, UBS has revealed little about its plans, whereas questions abound concerning the implications of the deal.
“The listing is lengthy and he’ll particularly search for particulars concerning the retention of Credit score Suisse’s employees and shoppers, and whether or not the financial institution will publish a timeline for the merger,” Andreas Vendetti, an analyst at Swiss funding administration agency Vontobel, instructed AFP.
Vendetti additionally stated the main focus this time won’t be on UBS’ backside line, which is normally a key measure of how the financial institution is doing, as a result of it will likely be affected by a sequence of outstanding components.
Distinctive good points
UBS indicated that the outcomes will embody an distinctive accounting achieve of about $35 billion as a result of distinction between the acquisition worth and web property acknowledged by Credit score Suisse, and stated it’s going to additionally embody Credit score Suisse’s built-in outcomes for lower than a month, which makes revenue estimation troublesome.
Whereas little has been introduced about Credit score Suisse’s outcomes, the SonntagsZeitung weekly newspaper quoted folks accustomed to the financial institution as saying that the financial institution incurred a lack of 3.5 billion Swiss francs ($4 billion) within the second quarter.
Analysts in Zurich Cantonal Financial institution anticipate curiosity within the outcomes of UBS’s non-public operations to come back “in second place”, noting in a analysis word that the majority consideration might be paid to “integration particulars” between the 2 banks.
The word predicted that traders can be significantly within the outflow of funds, as they seemed for indications of buyer confidence within the newly merged big.
The true worth
“We are going to carefully monitor post-merger income, extra integration plans, job cuts and what the financial institution does with its Swiss banking unit,” Ipek Ozkardskaya, an analyst at Swissquote Financial institution, agrees, telling AFP.
She added that the outcomes themselves “are anticipated to be sturdy, after all, after the merger. Nevertheless, traders might be watching whether or not this pressured marriage creates actual worth for the large UBS financial institution.”
Analysts have been significantly preoccupied with hypothesis concerning the destiny of Credit score Suisse’s Swiss unit, with questions over whether or not it might probably proceed to function independently as a result of vital overlap with UBS’ operations in Switzerland.
Final week, Bloomberg reported, citing unidentified sources, that UBS is leaning towards full integration with native financial institution Credit score Suisse, reasonably than leaving it to function as a separate unit. This means that vital job cuts could be anticipated.
A supply accustomed to the matter instructed AFP that the primary wave of layoffs had already begun at Credit score Suisse, whereas the Monetary Information web site reported that 200 funding bankers had already been requested to go away.
In the meantime, observers famous optimistic developments for UBS lately together with the settlement of lawsuits within the US relationship again to the 2008 international monetary disaster.
The financial institution additionally introduced this month that it could not want the billions supplied by the Swiss authorities and central financial institution to proceed with the Credit score Suisse takeover.
Benjamin Gui, an analyst at Deutsche Financial institution, wrote in a word that UPS seemed to be crusing “in a relaxed sea of excellent news and never dealing with a storm”.
The Swiss Competitors Fee instructed AFP it was nonetheless learning the merger and anticipated to situation its opinion “on the finish of September”.