No bank in the world has earned this much

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UBS is chasing records: Thanks to the CS acquisition, UBS can look forward to a massive record profit of CHF 51 billion. Never before in modern banking history has a bank earned so much in a single quarter. The previous record for the US and Europe is around CHF 13 billion, achieved by JP Morgan, the largest bank in the US, in the first quarter of 2021. Only the Industrial and Commercial Bank of China exceeded this value several times.

However, these two banks actually achieved record values ​​that would only be a book profit in the case of UBS, an accounting “quirk,” as Bloomberg wrote. Because the immediate takeover of CS pours a supposedly negative goodwill into UBS’s books. This is particularly negative for seller Credit Suisse. For the buyer, this creates a positive effect.

There are also risks

The calculation for the registration mark is done quickly. UBS paid three billion for CS, but its current book value is estimated at CHF 54 billion. The difference: 51 billion Swiss francs.

However, even today, UBS never tires of emphasizing that it is still completely unclear what risks are still dormant in CS, meaning that this value can still be significantly reduced. He’s also probably conscious that UBS’s record profits announcement will not bode well for the skeptical Swiss public, while the federal government and the National Bank should be responsible for liquidity assistance of up to CHF 259 billion.

This book profit may already accrue in the second quarter. The deal with CS will need to be completed by the end of June at the latest. It could even be as early as May, according to Bloomberg. On the other hand, UBS may delay the presentation of figures in order to have sufficient time to prepare outstanding quarterly results. One way or another, this presentation is destined to be history – because that means that the well-established Credit Suisse is definitely history.

Source :Blick