UBS Group AG, having acquired Switzerland’s largest bank, Credit Suisse, earlier this year, has disclosed its inaugural quarterly financial results on Thursday, indicating a profit of $28.88 billion for the second quarter of this fiscal year. The acquisition of Credit Suisse, undertaken by UBS in March for 3 billion Swiss francs ($3.4 billion), played a pivotal role in averting Credit Suisse’s financial distress.
Given that the deal was only finalized in June, the overall results of UBS encompass earnings for just one month of Credit Suisse.
The primary driver behind the outcome, as cited by UBS, was the $28.93 billion in negative goodwill arising from the Credit Suisse acquisition. The underlying earnings before tax, excluding costs related to the acquisition, negative goodwill, and integration-related expenses, amounted to $1.1 billion.
Negative goodwill signifies the scenario where the fair market value of assets acquired through a merger exceeds the purchase price.
UBS CEO Sergio Ermotti expressed, “Two and a half months since closing the Credit Suisse acquisition, we are wasting no time in delivering value for all our stakeholders from one of the biggest and most complex bank mergers in history,” as quoted by Business Today.
At the time of agreeing to acquire Credit Suisse, UBS was bound by two conditions imposed by the Swiss government. These conditions included a loss protection agreement of 9 billion Swiss francs ($10.24 billion) and a public liquidity backstop of 100 billion Swiss francs, both of which UBS claimed to have terminated.
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