According to a regulatory filing, UBS estimated a financial hit of around $17 billion from its emergency takeover of Credit Suisse. It said the rushed deal may have affected its due diligence. In a new filing with the U.S. Securities and Exchange Commission (SEC) late Tuesday night, the Swiss banking giant flagged a total negative impact of around $13 billion in fair value adjustments of the new combined entity’s assets and liabilities, along with a potential $4 billion hit from litigation and regulatory costs. However, UBS also expects to offset this by booking a one-off $34.8 billion gain from so-called “negative goodwill,” which refers to the acquisition of assets at a much lower cost than their true worth.
The bank’s emergency acquisition of its stricken domestic rival for 3 billion Swiss francs ($3.4 billion) was brokered by Swiss authorities over the course of a weekend in March, with Credit Suisse teetering on the brink of collapse amid massive customer deposit withdrawals and a plummeting share price. In the amended F-4 filing, UBS also highlighted that the short time frame under which it was forced to conduct due diligence may have affected its ability to “fully evaluate Credit Suisse’s assets and liabilities” prior to the takeover. Swiss governmental authorities approached UBS on March 15 while considering whether to initiate a sale of Credit Suisse in order to “calm markets and avoid the possibility of contagion in the financial system,” the filing revealed. The bank had until March 19 to conduct its due diligence and return with a decision.
