UBS said it didn’t want to acquire its rival and its inability to do thorough due diligence means it’s possible it “agreed to a rescue that is considerably more difficult and risky than it had contemplated.”
Swiss banking giant UBS on Tuesday said it was pressured into buying its ailing rival Credit Suisse for much more than it initially bargained for, warning investors it stands to lose billions in legal and regulatory costs from the rushed deal and illuminating the backstage workings that drove one of the banking world’s most consequential deals in decades.
UBS admitted the pressured nature of the deal limited its ability to “thoroughly evaluate” its national rival and fully plan for a potential takeover, adding that it may have “agreed to a rescue that is considerably more difficult and risky” than anticipated. The deal, orchestrated and backed by the Swiss government, was also much more costly than UBS initially bargained for, the filing showed.
Over the course of the brief negotiations, the sum trebled from around $1.1 billion to roughly $3.3 billion .new details about the likely impact of the merger on its accounting books, though it noted the figures are estimates and are likely to change as the dust settles. The Swiss bank said it has set aside around $4 billion to cover possible legal risks and regulatory costs associated with the takeover and expects to lose an estimated $13 billion in writing down assets.
to Bloomberg, noting that investors will likely view it as more of an accounting quirk than a sign of strength.Due diligence procedures for deals of this magnitude typically last months and involve a thorough examination of the target's books. UBS staff are now working to make up ground, figure out how to merge the businesses and close the deal in the coming weeks or months.
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