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Credit Suisse has warned that it expects at least $2.2bn of losses in the third quarter as UBS integrates the business it rescued six months ago.
In a financial report for the first half of the year, published on Friday, Credit Suisse said it would suffer a loss of approximately $1.6bn from exiting loans that had been placed in the combined group’s “bad bank” non-core and legacy division.
Credit Suisse, which will be run as a subsidiary of UBS until the businesses are legally merged next year, said it would also report a loss of up to $600mn in the third quarter as a decision to wind down “certain management arrangements”. A person briefed on the details said this was in relation to the sale of its securitised products division to Apollo last year.
UBS’s state-orchestrated takeover of its longtime rival was completed in June and is the most significant bank merger since the global financial crisis.
UBS reported a $29bn profit in the third quarter, the biggest ever recorded by a bank, which was almost entirely driven by an accounting gain from the Credit Suisse takeover.
Shares in UBS have risen more than 30 per cent to hit a 15-year high since it agreed to buy Credit Suisse.
At the end of August, UBS said it aimed to complete most of the integration of Credit Suisse by the end of 2026 and it would retain the bank’s domestic business.
It also announced the creation of the non-core and legacy unit, which would include parts of Credit Suisse’s business that were not aligned with UBS’s strategy and policies.
“The announced measures will have an impact on Credit Suisse’s divisions and may result in further impairments and writedowns, including relating to goodwill, software and real estate, certain fair value adjustments related to portfolios classified as held-for-sale, as well as tax impacts,” Credit Suisse said in its half-year report on Friday.
UBS is due to report its third-quarter results on November 7.
Chief executive Sergio Ermotti said last week that he would unveil the bank’s three-year strategy next February.
In its half-year statement, Credit Suisse said its total number of full-time employees dropped from 38,908 at the start of the year to 33,968 by the end of June, though this did not include the back-office division, which had already moved to become a separate subsidiary of UBS.
In its annual report at the start of the year, Credit Suisse said it employed 50,480 full-time staff.
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