Credit Suisse may report $2.2 billion of third-quarter losses

The expected losses come after UBS acquired Credit Suisse earlier this year. © Keystone / Michael Buholzer

Credit Suisse AG may report additional losses of as much as $2.2 billion in the third quarter, according to the defunct bank’s financial report for the first half of the year.

A loss of $1.6 billion will likely result after UBS Group AG — which acquired Credit Suisse earlier this year — decided to exit some loan portfolios, the report showed. The reclassified loans are part of Credit Suisse assets that have been moved by UBS to a “non-core” unit for wind down. 

A further $600 million loss may stem from the decision to “wind down certain management arrangements,” according to the report.

The potential extra losses come as investors remain optimistic about UBS’s capacity to successfully integrate its former rival. The bank’s shares are poised for their best quarterly share-price gain in 14 years.

UBS reported a $29 billion profit before tax in the second quarter, a result of the accounting difference between the $3.8 billion price the bank paid for Credit Suisse and the value of the acquired lender’s balance sheet.

Last month, UBS signaled that it is closing two-thirds of Credit Suisse’s investment bank, including almost all its trading operations, as part of plans to exit businesses that don’t fit with its existing strategy. Overall, the so-called “non-core” unit had approximately $55 billion of risk-weighted assets at the end of June. Some $8 billion in positions had been exited during the last quarter.

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