UBS today provided an update on the Credit Suisse acquisition.

On 12 June 2023, UBS successfully closed the acquisition of Credit Suisse Group AG. Since then, UBS has started to implement its target operating model, which includes leadership appointments up to three levels below the Group Executive Board.

UBS has also stabilized Credit Suisse’s Wealth Management and Swiss Bank, defined the Non-core and Legacy perimeter and reduced its risk-weighted assets by USD 8bn during the second quarter, it has repaid liquidity support to the Swiss National Bank and voluntarily terminated the Public Liquidity Backstop and Loss Protection Agreement.

Today, 31 August 2023, UBS announced its decision to fully integrate Credit Suisse’s Swiss Bank.

Sergio P. Ermotti, UBS Group CEO, commented:

“Our decision on Credit Suisse (Schweiz) AG follows a thorough evaluation of all available options. Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy. Clients will continue to receive the premium level of service they expect, benefiting from enhanced offerings, expert capabilities and global reach. Our stronger capital base will enable us to keep the combined lending exposures unchanged, while maintaining our risk discipline”.

UBS and Credit Suisse’s Swiss Bank will operate separately until their planned legal merger in 2024. The Credit Suisse brand and operations will remain in place until UBS completes the migration of clients to its system, which it expects in 2025.

Sergio Ermotti added:

“Our goal is to make the transition for clients as smooth as possible. The two Swiss entities will operate separately until their planned legal integration for 2024 with the gradual migration of clients onto UBS systems expected to be completed in 2025. Nothing will therefore change for clients in the foreseeable future. As we progress the integration, we remain fully committed to our personal, private, institutional and corporate clients.”

A Non-core and Legacy (NCL) business division has been set up, which will include Credit Suisse positions and businesses not aligned with our strategy and policies, such as the assets and liabilities of the Capital Release Unit (Credit Suisse) and the majority of assets and liabilities of the Investment Bank (Credit Suisse), Wealth Management (Credit Suisse) and Asset Management (Credit Suisse), as well as the remaining assets and liabilities of UBS’s NCL portfolio and smaller amounts of assets and liabilities of UBS business divisions that UBS has assessed as not strategic in light of the acquisition of the Credit Suisse Group.

As of 30 June 2023, the positions that will be included in NCL represented approximately USD 55bn of risk-weighted assets (RWA), excluding operational risk RWA, and USD 224bn of leverage ratio denominator (LRD). About half of these RWA are expected to run off by the end of 2026.

UBS aims to substantially complete the integration by the end of 2026. It further aims to achieve gross cost reductions of over $10 billion by that time. Cumulative integration-related expenses are expected to be broadly offset by accretion-to-par effects of approximately USD 12bn related to fair value adjustments applied to amortized-cost financial instruments.

As part of the integration UBS plans to simplify its legal structure, including the merger of UBS AG and Credit Suisse AG planned for 2024.

Based on these plans, and excluding integration-related expenses and accretion-to-par effects, UBS aims to achieve an exit rate cost income ratio of less than 70% by the end of 2026, and to progress toward a 2026 exit rate return on CET1 capital of around 15%.

UBS expects 3Q23 underlying PBT for UBS Group to be at around breakeven, and to deliver positive underlying PBT in 2H23, supported by various levers, including revenue stabilization, cost saves and lower funding costs. Beginning with the third quarter of 2023, UBS will report five business divisions – Global Wealth Management, Personal and Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy and to separately report Group Items.