UBS’s Two-Month Profit Beats Quarterly Estimate as Tender Starts
Sept. 29 (Bloomberg) — UBS AG, Switzerland’s largest bank, indicated profit for July and August already exceeds what analysts estimate for the full third quarter.
Earnings in the two months amount to 731 million Swiss francs ($769 million), according to a UBS statement today, more than 713 million-franc third-quarter net income average estimate of five analysts surveyed by Bloomberg.
The update on results was published as part of the offer the bank is making to investors to exchange their shares for those in UBS Group AG, a holding company created to meet regulator demands for separate legal entities in different regions. Swiss rulemakers are seeking to shield the country from future financial crises after a bailout of UBS in 2008.
UBS said investors can tender their shares on a one-for-one basis in an initial acceptance period from Oct. 14 through Nov. 11. A second tender will follow which will run through the end of the business day on Dec. 1, Zurich-based UBS said in the statement.
UBS needs shareholders to swap 90 percent of the company’s shares or more to complete the transaction, and it plans to pay out at least 25 centimes a share to investors in the holding company. The new structure will make it easier to break up the company in a crisis, which would lower the bank’s capital requirement under the Swiss rules, the bank said.
Banking Subsidiary
“The establishment of a holding company is a significant step in a series of envisaged changes to UBS’s legal structure that are intended to substantially improve its resolvability in response to evolving industry-wide ‘too-big-to-fail’ requirements,” UBS said in the statement. “The changes to UBS’s legal structure will not affect its strategy or how it serves its clients.”
UBS didn’t provide comparative figures for earnings in July and August last year. The company’s net income in the third quarter of last year was 577 million francs. UBS is due to publish third-quarter earnings on Oct. 28.
UBS plans to establish a banking subsidiary in Switzerland by mid-2015, which will house retail, corporate and the Swiss- booked wealth management business, reorganize the unit in the U.K. to make it more self-sufficient and have an intermediate holding company to hold all units in the U.S. by mid-2016. All businesses will remain within UBS AG, which in turn will be owned by UBS Group.
The bank will file a separate exchange offer for shareholders located in the U.S. with the Securities and Exchange Commission later today. The whole exchange may take as long as three months from the publication of prospectuses to final settlement of the offer, the bank said in July. After that UBS plans to squeeze out any untendered UBS AG shares, which could take “several additional months,” it said.
Credit Suisse Group AG, Switzerland’s second-biggest bank, said last year it also plans to fence off its Swiss operations in a separate unit to make it easier to salvage them in a crisis. The Zurich-based bank said it plans to implement changes to its structure starting in mid-2015. The company already has a group holding structure.
To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net; Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net David Scheer
