UBS Chairman Colm Kelleher said that next year will be one of the most difficult in the takeover process of Credit Suisse by the mentioned financial institution.
Mr. Kelleher explained not the most optimistic forecast for 2024 by the costs associated with the legal merger of the two banks. He made this statement on Tuesday, November 28, at the FT Global Banking Summit in London. According to him, in the process of implementing such a complex integration, the easy part of the initial job loss is when the company gets rid of the headcount. He also stated that so far his bank has not overdone the merger.
Currently, UBS is showing progress in the integration and restructuring of its former competitor. The financial institution acquired Credit Suisse in March of the current year as part of an emergency procedure to rescue this bank, which found itself in a difficult situation bordering on complete collapse. The integration process involves many difficulties, including, among others, closing out positions and managing legal obligations inherited from Credit Suisse.
Colm Kelleher said that his bank will have to close all legal entities of the former competitor, and transfer all data, after which it will be possible to get rid of control functions and associated costs. According to him, in 2024, UBS will focus on effectively uniting the parent creditors and decommissioning what was part of the ownership structure of Credit Suisse AG. Another important task for the next year, he called the merger of large subsidiaries. According to him, the successful completion of the specified tasks will allow UBS to solve the cost problem.
Mr. Kelleher said that the shares of the financial institution, whose board he heads, will be fully revalued in five years, provided Credit Suisse is successfully integrated.
In the third quarter of this year, UBS recorded a net loss of $785 million. This result was the first quarterly loss of a financial institution in almost six years. The negative performance of the bank from July to September is due to the costs of the Credit Suisse takeover, which amounted to $2 billion. At the same time, the lender recorded a significant influx of customers into its asset management business. This trend is explained by the first signs of stabilization in Credit Suisse.
Colm Kelleher in London also spoke about the risks in the sphere of private lending amid the rapid growth of the market. In his opinion, a bubble is currently forming in this asset class. He says that in the current situation, the threat of a fiduciary crisis is realistic.
Private lending is gaining popularity as a financing tool for buyout companies. This trend is because traditional banks have refused to provide consumers with appropriate services against the background of a sharp increase in interest rates and a decrease in the level of investors’ willingness to risk. Some financial institutions are concerned about the state of affairs data because underwriting such types of loans is a significant source of income for them.
In November, Pimco executives said that there is not enough regulation in the private lending market and it lacks transparency.
Co-head of the European credit unit of Ares Management Corp. Blair Jacobson has a different opinion. According to him, there is no bubble in the private lending sector.
The volume of the private lending market has approximately tripled since 2015, reaching $1.6 trillion.
As we have reported earlier, UBS to Pay Over $1 Billion to Settle Fraud Claims.
