ZURICH (AFP) – As UBS prepares to post earnings this week, investors and employees are eagerly awaiting clues as to how Switzerland’s largest bank is faring after swallowing up its fallen rival Credit Suisse.
UBS is due to release its second-quarter income statement tomorrow – the first results presented since the mega-merger that rocked the Swiss banking scene earlier this year.
Keen attention will be paid to layoff plans and the fate of Credit Suisse’s Swiss division, which have been at the heart of swirling rumours in recent months.
Swiss authorities strongarmed UBS into the USD3.25 billion takeover on March 19 to prevent its closest domestic rival from going under – which could have had catastrophic consequences for the global financial system.
But since the complex merger was completed in June, UBS has divulged little about its plans.
In the meantime, the number of questions around the repercussions of the deal has swelled.
“The list is long,” analyst at Swiss Investment Manager Vontobel Andreas Venditti told AFP.
In particular, he added, he will be looking for details on the retention of Credit Suisse staff and clients, and hopefully a timeline for the integration process.
Venditti also said there would be less focus this time around on UBS’s net profit – usually a key measure of how the bank is faring – since it will be distorted by a string of exceptional items.
UBS has already indicated that the results should include an accounting gain of nearly USD35 billion due to the difference between the purchase price and recognised net assets of Credit Suisse.
They will also include less than a month of integrated Credit Suisse results, making any profit estimates difficult, he said.
While little has been said publicly about Credit Suisse’s results, the SonntagsZeitung weekly newspaper cited insiders at the bank suggesting it suffered a loss of CHF3.5 billion (USD4 billion) during the second quarter.
Analysts with the Zurich Cantonal Bank agreed that results from UBS’s own operations were likely to “take a backseat”, suggesting that most attention would be paid to “integration details”.
There has been particularly intense speculation around the fate of Credit Suisse’s Swiss unit, with questions over whether it could continue to operate independently due to the significant overlap with UBS’s business in Switzerland.
At the same time, observers noted recent positive developments for UBS, including its settlement of lawsuits in the United States dating back to the 2008 global financial crisis.
The bank also announced this month that it would not need the billions in support offered by the Swiss government and the central bank to go through with the Credit Suisse takeover.
UBS seems to be sailing on “a summer breeze of good news rather than a storm”, Deutsche Bank analyst Benjamin Goy said in a research note.
