UBS may delay its second-quarter earnings as long as it can, say people familiar with this matter. The bank is grappling with the political and financial complexities surrounding its rescue of Credit Suisse.
The bank was due to announce its results on the 25th of July, but executives are considering delaying publication until August. At that time they could also update investors on the plans for Credit Suisse’s domestic business.
The rescue of Credit Suisse by Swiss authorities, in March, will be the most complex and significant banking merger since financial crisis. Politicians and lawyers have already challenged parts of the deal.
UBS executives hoped to close the deal before the end of June. The EU’s competition authority has already approved the agreement.
According to those involved in planning, the Swiss government’s support is still being finalised. This means that it won’t be complete until at least this week.
UBS’ finance team faces a further challenge in combining two accounting systems that follow different standards. UBS uses the International Financial Reporting Standards while Credit Suisse follows Generally Accepted Accountancy Principles which is more common in US companies.
Companies are encouraged by IFRS to publish interim results within 60 days of the end date.
A survey conducted soon after the deal revealed that three quarters of Swiss voters wanted to see the mega-bank split up.
In a symbolic act of protest, Swiss parliamentarians voted a month later against the SFr109bn government financial package that supports the deal.
The left-leaning Social Democratic Party of Switzerland announced last week that it had developed plans to halve post-merger bank balance sheets, bringing them down from SFr1.5tn and closer to the gross domestic product (GDP) of the country, which is SFr734bn.
Politicians have expressed their anger about the SFr9bn in support that the Swiss government has agreed to give UBS for losses that exceed the initial SFr5bn the company is expected to bear.
UBS executives want to demonstrate to investors that they are not dependent on the government and will avoid taking advantage of it. Sergio Ermotti, the recently returned chief executive of UBS, has said that Swiss taxpayers will “exceptionally unlikely to” suffer losses from this takeover.
Ermotti also dismissed concerns that the size will pose a problem to Switzerland. He said it was more significant that UBS agreed to takeover a failing institution.
UBS’s initial plan to merge with Credit Suisse has caused alarm in Switzerland because of fears about branch closures and jobs cuts. UBS executives said they are considering all options for their plans to merge with Credit Suisse. A final decision is expected by August 31.
UBS has declined to comment about its discussions regarding delaying the second-quarter results.
Credit Suisse has asked Deloitte, its long-time advisor, to prepare its accounts so that UBS can complete the transaction.