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Five months after being pulled into the rescue of Credit Suisse, UBS Group AG’s decision to break free of a government backstop is set to accelerate the historic takeover of its smaller rival.
Switzerland’s biggest bank said it will voluntarily end a safety net negotiated as part of its purchase of Credit Suisse, including a 9 billion-franc ($10.3 billion) loss protection agreement. The move buys UBS more freedom in how it deals with its defunct rival’s riskier assets, which will be placed in a “Non-Core and Legacy unit” for businesses that it doesn’t want, a person familiar with the matter said.
It comes as a taskforce within UBS is wrapping up decisions on the non-core businesses, with the goal of sending out communications to all clients in September, another person familiar with the matter said.
UBS’s decision to give up a ten-figure insurance policy is the clearest indication yet of the bank’s confidence in its financial strength, and followed months of due diligence that gave the lender increasing certainty that the guarantees were no longer needed.
UBS said in May it will benefit from an estimated $34.8 billion accounting windfall thanks to the deal when it reports earnings later this month.
The mammoth integration has already started. Job cuts are already taking place, teams are being reshuffled and at Credit Suisse’s New York office, the nameplate on the wall now reads Credit Suisse AG, a UBS Group company.
But the bulk of the work lies ahead.