UBS is considering delaying its second-quarter results as long as possible as the bank wrestles with the financial and political complexities of its rescue of Credit Suisse, according to people familiar with the matter.
The bank is due to report its results on July 25th, but executives are weighing delaying the publication until the end of August when they may also provide investors with an update on their plans for Credit Suisse’s domestic business, the people said.
The rescue of Credit Suisse, which was engineered by Swiss authorities in March, is expected to be the most significant and complicated banking merger since the financial crisis. Parts of the deal have already been challenged by politicians and lawyers.
UBS executives had hoped to complete the deal by the start of June – it has already been signed off by the European Union’s competition authorities.
But the details of Swiss government support are still to be finalised, which means it will not be completed until this week at the earliest, according to people involved in the planning.
A further complexity facing UBS’s finance team is combining the two banks’ accounting systems, as each follow different standards. UBS follows the International Financial Reporting Standards (IFRS) while Credit Suisse uses the Generally Accepted Accounting Principles, which are more common among US companies.
Under IFRS, companies are encouraged to publish their interim results no later than 60 days after the end of the reporting period.
The shotgun marriage between the banks has attracted criticism within Switzerland; a poll published shortly after the deal showed that three-quarters of voters wanted the mega bank to be split up.
A month later, Swiss parliamentarians voted against the government’s 109 billion Swiss franc financial package that underpins the deal in a symbolic protest.
Last week, the country’s left-leaning Social Democratic party said it had drawn up plans to halve the bank’s post-merger balance sheet, bringing it down from 1.5 trillion Swiss francs to closer to the country’s gross domestic product of 734 billion Swiss francs.
With Swiss federal elections due in October, politicians have vented their anger over the nine billion Swiss francs of support the government has agreed to provide UBS to absorb losses if they run beyond an initial five billion Swiss francs that the company will bear itself.
But UBS executives are at pains to show investors they will try to limit their dependence on the state and avoid using the government’s support. Recently returned chief executive Sergio Ermotti has insisted that Swiss taxpayers are “exceptionally unlikely” to suffer losses on the takeover.
Ermotti has also dismissed fears that the size of the bank will be a problem for Switzerland, saying it was more important that UBS had agreed to take over a failing institution.
UBS’s original plan to merge its domestic bank with Credit Suisse’s has caused alarm within Switzerland due to fears over branch closures and job cuts. UBS executives have since said that “all options are on the table” over its plans for the Credit Suisse business, with a final decision expected by the end of August.
UBS declined to comment on its discussions over delaying its second-quarter results.
Credit Suisse has enlisted its longtime adviser, Deloitte, to help prepare its accounts for UBS to complete the deal. – Copyright The Financial Times Limited 2023