UBS may Lose $17 billion from Credit Suisse Acquisition
UBS Group AG is expected to incur financing charges of up to $17 billion from its takeover of Credit Suisse.
ph: UBS
While the above estimates are preliminary, actual numbers may change significantly after the transaction is completed. UBS has also stated that it could record more provisions for restructuring later, but did not give specific numbers.
Analysts at Jefferies have estimated that the cost of restructuring, litigation provisions, and planned closures of the non-core division that UBS will incur could be as high as $28 billion.
Credit Suisse will face certain restrictions on its ability to do business until the UBS acquisition is complete. This is expected to help UBS limit receiving new losses from the merger. As per regulatory filings, Credit Suisse will not be granted new loans in excess of 100 million Swiss Francs for investment-grade customers or in excess of Franc 50 million for non-investment level clients. Additionally, Credit Suisse is not allowed to make capital expenditure transactions of more than 10 million Francs.
Despite the potential financial challenges, UBS seems confident in the acquisition of Credit Suisse. However, only time will tell if the benefits outweigh the costs for the bank.
UBS may Lose $17 billion from Credit Suisse Acquisition
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