UBS
posted a loss in the third quarter on spiraling costs of merging with its rival Credit Suisse.
Now an even bigger Swiss banking behemoth, UBS (ticker: UBS) reported its first loss in six years on the back of massive layoffs, write-downs, and administrative expenses from integrating Credit Suisse, which it bought for a little more than $3 billion earlier this year. It would have made a pretax profit of $800 million without the cost of integration, but the loss came to $785 million in the quarter.
The sums nevertheless pale in comparison with what UBS gained in the acquisition. The purchase price was for just a fraction of the value of assets on Credit Suisse’s books. That led to a $29 billion profit for UBS in the second quarter, a record for any bank.
The deal fueled some criticism in Switzerland on concern that it would lead to job losses and less competition. The terms also appeared very favorable to UBS—one politician called it the deal of the century.
While UBS had initially resisted calls to take over its crosstown rival when it lost the market’s confidence, the Swiss government ultimately stepped in to broker a deal, providing guarantees against losses to ensure it went through.
In the third quarter, UBS said it had won $22 billion in new money at its wealth management business. That includes $3 billion more from Credit Suisse’s wealth management team, which recorded its first net inflows since the first quarter of 2022.
UBS shares rose 5% in Swiss trading Tuesday. Its American depositary receipts gained 3.2% in premarket trading.
Write to Brian Swint at brian.swint@barrons.com
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