UBS reported an unprecedented quarterly profit in banking history following its urgent acquisition of Credit Suisse.
The bank earned $29bn (£22.8bn) in the quarter ending June, boosted by incorporating Credit Suisse’s balance sheet. UBS purchased its competitor for a mere $3.3bn during a regulator-driven move amidst a banking crisis in March.
This acquisition has propelled UBS to oversee approximately $5trn in assets, with CEO Sergio Ermotti at the helm of one of the most significant financial mergers.
Discounting the negative goodwill from the Credit Suisse transaction, the profit before tax stood at $1.1bn.
UBS’s stock has risen by 30% this year, positioning it as the highest-valued major European bank. This quarterly gain surpasses JPMorgan’s record $14.3bn profit in Q1 2021, a previous high for both US and European banks.
Furthermore, UBS announced the complete integration of Credit Suisse’s profitable Swiss division into its structure, despite potential opposition in Switzerland due to anticipated job losses.
While UBS had the option to separate this business for an IPO, it is notable that this division was Credit Suisse’s sole profitable unit last year.
Chief Executive Sergio Ermotti stated:
“Our study distinctly indicates that complete integration is the optimal path for UBS, its stakeholders, and the Swiss economy.
Until their scheduled legal fusion in 2024, the two Swiss units will function independently. The transition of clients to UBS platforms is anticipated to conclude by 2025.
The projected savings of more than $10 billion by the close of 2026 is an increase from a previous forecast of $8 billion by 2027. The majority of these savings will arise from personnel reductions.”
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