#UBS 🇨🇭 reported the largest quarterly profit ever for a bank. Obviously, this is to do with its acquisition of Credit Suisse. It made $29 billion from the difference between the $3.8 billion it paid and the value of Credit Suisse's balance sheet. This accounting gain has even surpassed JPMorgan Chase & Co.’s historic $14.3 billion organic profit in Q1 2021.
Sorry, I forgot to mention why this might suck:
💼 Jobs: 3,000 positions will be cut in Switzerland. Globally, around 35,000 jobs, predominantly from Credit Suisse, are expected to be eliminated in three planned rounds. Since the acquisition, 10% of Credit Suisse employees have already left.
🌍 Swiss politics: Credit Suisse's iconic 163-year-old brand will vanish, even in Switzerland. For many people who live here, Credit Suisse's brand feels like cultural heritage, like their SKA ski hat in the 1970s.
Credit Suisse’s much-loved domestic bank which was previously the most consistently profitable unit in the business, will also go with the brand, which has upset quite a few Swiss people.
Another interesting note is that UBS voluntarily renounced a 9 billion francs state protection because it knew there would be a massive public and political backlash from this profit announcement. It will probably give Inside Paradeplatz less to gossip about.
💸 Wealth Management: UBS is close to gaining control over $5 trillion in assets. The challenge? Containing Credit Suisse's asset outflows. Switzerland has also uncharacteristically announced a sudden move to clampdown on money laundering – I can’t stress how ironic this is in Switzerland.
📊 Financial Roadmap: UBS' strategy envisions an $8 billion savings pool, streamlining staff and enhancing IT infrastructure. I think this means firing people and becoming even more technologically backward. To be fair, most big banks excel in doing both.
We will also need to wait to see what happens with loan reductions, securities management and CEO Sergio Ermotti's overall vision for the merged entity.
Any thoughts?
