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BLOOMBERG
UBS Group AG had its credit outlook lowered by S&P Global Ratings and Moody’s Investors Service as the bank faces
integration and restructuring challenges following its emergency takeover of Credit Suisse Group AG.
The Swiss lender’s rating outlook was cut to negative from stable by both firms, with analysts citing the risk of client attrition and the complex task of running down Credit Suisse’s trading operations. UBS’s long-term rating was affirmed by S&P at A- and its senior unsecured rating was affirmed at A3 by Moody’s.
“We see material execution risk in UBS’s integration of Credit Suisse,†S&P analysts including Benjamin Heinrich and Anna Lozmann wrote. They cited “the size and weaker credit profile†of Credit Suisse “and particularly the complexity in winding down a large part†of its investment banking operations.
The 3 billion-franc takeover, agreed in crisis talks at the urging of the government, is turning UBS from a wealth manager that made a predictable profit into a complex integration and restructuring case with an as-yet-unknown number of jobs likely to be shed over the next several years.
Credit Suisse had been unable to win back investor and client confidence after a series of scandals and losses, which led to credit rating downgrades and rising funding costs.
UBS’s shares slumped as much as 16% before reversing gains, as investors weighed the pros and cons of a takeover engineered to prevent the crisis of confidence in Credit Suisse from spreading.