UBS posts large loss on costs of Credit Suisse takeover
In its first quarter since it closed its rescue deal with Credit Suisse, UBS made a big loss, which highlights the steep challenges the bank faces as it absorbs that bank.
Swiss lender UBS reported a net loss of $785 million for the June-to-September quarter, partly due to $2 billion in costs associated with the deal.
In the coming months, those expenses should decrease as the integration proceeds, according to UBS (UBS). However, tackling the business decline that brought Credit Suisse to the edge of collapse, while costs remain high, will prove challenging.
Despite expectations, UBS CEO Sergio Ermotti said Credit Suisse is “in general less positive” than he expected.
Immediately following the announcement of the deal orchestrated by the Swiss government, Ermotti was brought back to lead UBS.
Shares of UBS gained 4% in Zurich despite the third-quarter loss, as investors cheered a strong client inflow, a sign of confidence.
During the emergency takeover, UBS saw $22 billion of new money flow into its global wealth management business, as it gained new clients and recaptured assets from those who had pulled funds immediately before and after the event. This figure includes flows into Credit Suisse’s wealth management unit, which turned positive for the first time in 18 months.
UBS attracted net new deposits of $33 billion across the group as a whole, with two thirds of those coming from legacy clients at Credit Suisse.
In a statement, Ermotti said. In March, UBS was tasked with stabilizing the global financial system, so we are optimistic about the future as we create a stronger and safer version of that company