UBS set for record quarter, plenty of post-takeover questions

afr.com:

UBS Group investors are bracing for plenty of superlatives and drama as the Swiss lender prepares to unveil the first quarterly results since taking over Credit Suisse in an unprecedented government-led rescue.

Five months after agreeing to the deal, chief executive officer Sergio Ermotti is expected to report one of the biggest windfall profits ever recorded by a bank on Thursday, along with potentially billions of dollars in writedowns on assets and details on the future of thousands of jobs.

Sergio Ermotti: investors are keen to hear more about his vision for the global bank. Bloomberg

More important than the numbers will be indications of progress in integrating Credit Suisse, particularly with respect to the wealth management business and the future of its Swiss unit.

Investors will also parse Ermotti’s comments for fresh clues as to his strategic vision for what’s now the only global universal bank left in Switzerland.

A UBS veteran who spent his first stint as CEO turning the lender into a model wealth manager after its near-failure in the financial crisis, Ermotti is keenly aware of the political sensitivities surrounding the Credit Suisse deal, which he was brought back to oversee.

In a surprise move this month, UBS decided to voluntarily give up a safety net negotiated as part of the purchase, including a 9 billion-franc ($15.8 billion) government backstop.

The decision reduces the potential for political fallout and public discontent as UBS is likely to post an accounting windfall of some $US35 billion ($54 billion)after buying Credit Suisse at a steep discount to book value, while also targeting tens of thousand of jobs for elimination.

The accounting gain is likely to result in one of the biggest bank