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Accounting for the acquisition of the Credit Suisse Group
 12 Months Ended
Dec. 31, 2023
Disclosure Of Business Combinations [Line items]  
Accounting for the acquisition of Credit Suisse Group
 
Note 2 Accounting for the acquisition of the Credit
 
Suisse Group
The transaction
On 12 June
 
2023, UBS Group AG
 
acquired Credit
 
Suisse Group
 
AG, succeeding
 
by operation
 
of Swiss
 
law to
 
all assets
and liabilities
 
of Credit
 
Suisse Group AG,
 
and became
 
the direct
 
or indirect
 
shareholder of
 
all of
 
the former
 
direct and
indirect subsidiaries of Credit Suisse Group AG (the Transaction).
The acquisition followed a request from the Swiss Federal Department of Finance, the Swiss
 
National Bank and the Swiss
Financial Market Supervisory
 
Authority (FINMA) to
 
both firms
 
to duly
 
consider the Transaction
 
in order to
 
restore necessary
confidence in the stability of
 
the Swiss economy and banking
 
system and to serve the
 
best interests of the shareholders
and stakeholders of UBS and Credit Suisse. The firms subsequently entered into a
 
merger agreement on 19 March 2023.
Upon the
 
completion
 
of the
 
Transaction,
 
each
 
outstanding
 
registered
 
Credit
 
Suisse
 
Group AG
 
share
 
converted
 
to the
right to
 
receive, subject
 
to the
 
payment of
 
certain fees
 
to the
 
Credit Suisse
 
Depositary in
 
the case
 
of Credit
 
Suisse American
depositary
 
shares,
 
a
 
merger
 
consideration
 
consisting
 
of
1/22.48
 
UBS Group AG
 
shares.
 
In
 
aggregate,
 
Credit
 
Suisse
Group AG shareholders received
5.1
% of the outstanding
 
UBS Group AG shares on the acquisition
 
date, with a purchase
price of USD
3.7
bn.
Accounting principles: conversion from US GAAP
 
to IFRS Accounting Standards of the Credit Suisse Group
and IFRS 3 purchase price allocation
 
The acquisition of the Credit Suisse Group constitutes a business combination under IFRS 3,
Business Combinations
, and
is required to be accounted for by applying the acquisition method
 
of accounting.
As part of the
 
acquisition method of accounting, the
 
assets and liabilities of
 
the Credit Suisse Group have
 
been converted
from US
 
generally accepted
 
accounting principles
 
(GAAP) to
 
IFRS Accounting
 
Standards. The
 
most material
 
conversion
impact arose
 
from
 
the
 
different
 
derivative
 
netting rules,
 
resulting
 
in an
 
increase
 
in
Total assets
 
of
 
USD
70
bn,
 
with no
impact on
Equity
. Other conversion
 
adjustments arose
 
from the
 
removal of the
 
Swiss pension
 
surplus and the
 
different
methods used to calculate expected credit losses.
›
Refer to Note 20 for more information about the expected
 
credit losses recognized as an additional measurement adjustment
following the acquisition date
Remeasurement of assets, liabilities and off-balance
 
sheet arrangements at the acquisition date as part of
the IFRS 3 purchase price allocation
Financial instruments
The financial
 
assets and
 
liabilities of
 
the Credit
 
Suisse Group
 
have been
 
remeasured
 
to fair
 
value as
 
of the
 
acquisition
date,
 
resulting
 
in
 
the
 
provisional
 
fair
 
values
 
disclosed
 
below,
 
with
 
negative
 
fair
 
value
 
adjustments
 
of
 
USD
14.9
bn,
including USD
4.8
bn recognized
 
on financial
 
instruments that
 
are classified
 
at fair
 
value through
 
profit or
 
loss and
 
fair
value
 
adjustments
 
of
 
USD
10.1
bn
 
recognized
 
on
 
financial
 
instruments
 
at
 
amortized
 
cost
 
and
 
off-balance
 
sheet
commitments and guarantees. Fair
 
value adjustments on financial instruments
 
measured at fair value
 
on the acquisition
date were
 
primarily driven by
 
a change in
 
management’s view
 
of the principal
 
and most advantageous
 
markets and to
reflect additional liquidity adjustments.
In
 
particular,
 
material
 
fair
 
value
 
adjustments
 
have
 
been
 
made
 
regarding
 
the
 
Credit
 
Suisse
 
Group
 
lending
 
portfolio,
including
 
mortgages
 
and
 
corporate
 
lending, to
 
bring
 
the
 
financial
 
instruments
 
from
 
amortized
 
cost
 
to
 
fair
 
value.
 
Fair
value adjustments applied to amortized-cost financial instruments
 
and lending arrangements that are fair
 
valued through
profit or
 
loss will
 
generally
 
accrete to
 
par over
 
their expected
 
lives through
Interest income
 
from financial
 
instruments
measured at amortized cost and fair value through other
 
comprehensive income
,
Fee and commission income
 
and
Other
net
 
income
 
from
 
financial
 
instruments
 
measured
 
at
 
fair
 
value
 
through
 
profit
 
or
 
loss
 
in
 
the
 
income
 
statement
 
if
 
the
instruments continue to be held.
 
›
Refer to Note 21 for more information
Adjustments have
 
also been
 
made to
 
other asset
 
and liability
 
categories, with
 
new intangible
 
assets of
 
USD
0.9
bn and
additional litigation provisions and contingent liabilities
 
of USD
5.4
bn recognized as detailed below. Furthermore, Credit
Suisse Group goodwill has been derecognized, the fair value of its internally generated software has been marked down
in consideration of how market participants would value acquired software,
 
and its real estate held and leased has been
revalued.
 
With the acquisition
 
date of 12 June
 
2023, for convenience
 
the Credit Suisse
 
Group was consolidated
 
from 31 May 2023,
as the impact
 
of transactions and
 
activities in the
 
period from 31 May
 
2023 to 12 June
 
2023 on the
 
consolidated financial
statements was not material.
Intangible assets
Included in
Intangible assets
 
is a fair value
 
of USD
0.9
bn for core
 
deposits and customer
 
relationship intangibles,
 
which
were recognized as part of the acquisition of
 
the Credit Suisse Group. These assets were not previously recognized in the
financial statements of the Credit Suisse
 
Group. The fair value of
 
the core deposits intangible asset was
 
determined using
the after-tax cost
 
savings method under
 
the income approach.
 
After-tax cost savings
 
were estimated
 
by comparing the
cost of the
 
existing deposits
 
(including the
 
cost of
 
maintaining them)
 
to the
 
cost of
 
obtaining alternative
 
funds from
 
a
mix
 
of
 
diversified
 
funding
 
sources
 
available
 
to
 
market
 
participants.
 
The
 
core
 
deposits
 
intangible
 
asset
 
represents
 
the
present value of the after-tax cost savings expected
 
to be realized over the remaining useful
 
life of the deposits. The fair
value of
 
the customer
 
relationship intangible
 
asset was
 
determined using
 
the multi-period
 
excess earnings
 
method (an
income-based
 
valuation
 
methodology),
 
by
 
discounting
 
estimated
 
after-tax
 
excess
 
earnings
 
attributable
 
to
 
existing
customer relationships over
 
their remaining useful
 
lives. Both intangible asset
 
valuations include assumptions
 
consistent
with
 
how
 
a
 
market
 
participant
 
would
 
estimate
 
fair
 
values,
 
such
 
as
 
growth
 
and
 
attrition
 
rates
 
and
 
projected
 
fee
 
and
interest income, as well as related costs to
 
service the relationships and deposits, and discount rates.
 
Also
 
included
 
in
Intangible
 
assets
 
are
 
mortgage-servicing
 
rights
 
(MSRs)
 
of
 
USD
0.4
bn,
 
which
 
represent
 
the
 
right
 
to
perform specified mortgage-servicing activities on
 
behalf of third parties, generating income through
 
servicing fees. The
MSRs were valued using a discounted cash flow model.
Additional provisions and contingent liabilities
 
Included in
Provisions and contingent liabilities
 
is USD
5.4
bn for additional litigation provisions and contingent
 
liabilities,
which includes USD
1.6
bn for litigation provisions, in addition to
 
the existing USD
1.3
bn provision previously recorded by
the
 
Credit
 
Suisse
 
Group
 
to
 
reflect
 
management’s
 
assessment
 
of
 
the
 
associated
 
probability,
 
timing
 
and
 
amount
considering
 
new
 
information,
 
and
 
USD
3.8
bn
 
contingent
 
liabilities
 
for
 
certain
 
obligations
 
in
 
respect
 
of
 
litigation,
regulatory
 
and
 
similar
 
matters
 
identified
 
in
 
the
 
purchase
 
price
 
allocation.
 
The
 
timing
 
and
 
actual
 
amount
 
of
 
outflows
associated with litigation
 
matters are
 
uncertain. UBS has
 
continued to assess
 
the development
 
of these obligations
 
and
the amount and timing
 
of potential outflows. The
 
USD
3.8
bn contingent liabilities reflects an
 
increase of USD
0.8
bn from
the previously
 
reported
 
USD
3.0
bn, with
 
an additional
 
USD
45
m increase
 
in litigation
 
provisions recognized,
 
following
publication of the UBS Group fourth quarter
 
report as detailed in the table on the following page.
In addition, UBS
 
has also recognized
 
USD
4.5
bn for fair
 
value adjustments on
 
acquired loan commitments
 
and guarantees
recognized
 
under IFRS
 
Accounting
 
Standards
 
as a
 
consequence
 
of the
 
acquisition,
 
of which
 
USD
2.3
bn
 
is included
 
in
Provisions and contingent liabilities
 
and USD
2.2
bn is included as fair value loan commitments within
Derivative financial
instruments
 
liabilities,
 
consistent
 
with
 
the
 
classification
 
of
 
financial
 
assets
 
that
 
arise
 
from
 
drawdowns
 
of
 
these
 
loan
commitments.
›
Refer to “IFRS 3 measurement period adjustments
 
in the third and fourth quarters of 2023 for
 
the acquisition of the Credit Suisse
Group” in this Note
›
Refer to Note 18 for more information
 
Determination of the purchase price consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Measure
Credit Suisse Group ordinary shares outstanding, 12
 
June 2023
Number of shares (m)
3,949
Exchange ratio (1 to 22.48)
Ratio
0.04
UBS ordinary shares
Number of shares (m)
176
UBS ordinary share price
CHF
18.35
Purchase price consideration, before consideration of share-based compensation
 
awards
CHF m
3,223
Purchase price consideration, before consideration of share-based compensation awards
 
using an exchange rate of 1.10
1
USD m
3,547
Impact of share-based compensation awards
2
USD m
162
Purchase price consideration, after consideration of share-based compensation awards
USD m
3,710
Settlement of pre-existing relationships
USD m
135
Provisional purchase price consideration, after consideration of pre-existing relationships
USD m
3,845
Net cash and cash equivalents acquired with the Credit Suisse
 
Group (included in cash flows from investing activities)
USD m
108,510
of which: cash and balances at central banks
USD m
93,012
of which: amounts due from banks
USD m
12,601
of which: money market paper
USD m
2,897
1 The purchase
 
price consideration is
 
reflected as a
 
reduction to treasury
 
shares of the
 
Group at their
 
weighted average cost,
 
with the difference
 
between the fair
 
value of UBS
 
shares on the
 
closing date and the
weighted average cost of treasury shares
 
in the UBS Group balance sheet
 
on the closing date taken
 
as an adjustment to share premium.
 
As of 12 June 2023,
 
this resulted in a total purchase
 
price of approximately
USD
3.7
bn, based on the UBS
 
Group AG share price
 
on 12 June 2023
 
and before considering the
 
effect of pre-existing relationships.
 
2 Represents the value
 
of share-based compensation awards
 
outstanding to
Credit Suisse employees attributable to the service period completed on the date of acquisition.
IFRS 3 measurement period adjustments for the acquisition
 
of the Credit Suisse Group
The
 
acquisition
 
of
 
Credit
 
Suisse AG
 
was
 
made
 
without
 
the
 
ordinary
 
due
 
diligence
 
procedures
 
and
 
outside
 
the
conventional time frame for
 
an acquisition of
 
this scale and nature.
 
As such, complete
 
information about all relevant
 
facts
and circumstances
 
of the
 
acquisition date
 
were not
 
practically available
 
to UBS
 
at the
 
time when
 
the initial
 
acquisition
accounting was
 
applied for
 
the purpose
 
of the
 
UBS Group
 
second quarter
 
2023 report,
 
third quarter
 
2023 report
 
and
fourth quarter 2023
 
report.
 
Due to the complexity
 
and size of the
 
transaction and the
 
integration process, it
 
is possible
that
 
new
 
information
 
about
 
relevant
 
facts
 
and
 
circumstances
 
of
 
the
 
acquisition
 
date
 
becomes
 
available
 
to
 
the
management after the
 
date of issuance of these
 
financial statements. Consequently,
 
the amounts that form
 
part of the
business
 
combination
 
accounting
 
are
 
considered
 
provisional
 
and
 
may
 
be
 
subject
 
to
 
further
 
measurement
 
period
adjustments
 
if new
 
information
 
about
 
the facts
 
and circumstances
 
existing
 
on the
 
date of
 
the acquisition
 
is obtained
within one year from the acquisition date.
In the second half of
 
2023, in light of the
 
additional information
 
about circumstances
 
existing on the acquisition
 
date that
became
 
available
 
to
 
the
 
management, IFRS
 
3
 
measurement period
 
adjustments were
 
made
 
in
 
Non-core
 
and
 
Legacy,
reflecting additional decisions to sell acquired loans and
 
off-balance sheet loan commitments.
 
In addition, further IFRS 3
measurement period
 
adjustments have been
 
made to the acquisition
 
date fair value of
 
certain loans
 
and off-balance sheet
loan commitments following
 
a detailed
 
review in Non-core and Legacy, Personal & Corporate
 
Banking and Global Wealth
Management,
 
and to litigation
 
contingent liabilities
 
in Non-core
 
and Legacy.
Additionally, several presentational changes resulted in a reclassification of financial assets reported at fair value not held
for trading
 
to financial
 
assets at
 
fair value
 
held for
 
trading in
 
the acquisition
 
date balance
 
sheet to
 
align with
 
presentational
approaches followed by the UBS Group.
Previously reported financial information has been revised
 
for these effects as set out in the table below.
Effect of measurement period and presentation adjustments on
 
the acquisition date balance sheet
 
The table
 
below sets
 
out the
 
identifiable net
 
assets attributable
 
to the
 
acquisition of
 
the Credit
 
Suisse Group
 
as of
 
the
acquisition
 
date
 
and
 
includes
 
the
 
effects
 
of
 
adjustments
 
on
 
the
 
acquisition
 
date
 
balance
 
sheet
 
made
 
during
 
the
measurement period and detailed below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Purchase price consideration, after consideration of share-based compensation awards
3,710
Credit Suisse Group net identifiable assets on the acquisition
 
date
Assets
As previously
reported in the
second quarter 2023
report
Measurement period
adjustments
Reference
number
Revised
Cash and balances at central banks
93,012
93,012
Amounts due from banks
13,590
13,590
Receivables from securities financing transactions measured at amortized
 
cost
26,194
26,194
Cash collateral receivables on derivative instruments
20,878
20,878
Loans and advances to customers
261,839
(14,620)
2, 4
247,219
Other financial assets measured at amortized cost
13,440
(12)
2
13,428
Total financial assets measured at amortized cost
1
428,954
(14,632)
414,322
Financial assets at fair value held for trading
35,046
21,191
2, 3
56,237
Derivative financial instruments
62,162
62,162
Brokerage receivables
366
366
Financial assets at fair value not held for trading
61,305
(7,106)
3
54,199
Total financial assets measured at fair value through profit or loss
158,879
14,085
172,964
Financial assets measured at fair value through other comprehensive income
1
0
0
Investments in associates
1,657
(88)
1,569
Property, equipment and software
6,055
6,055
Intangible assets
1,287
1,287
Deferred tax assets
942
56
998
Other non-financial assets
6,892
6,892
Total assets
604,667
(579)
604,088
Liabilities
Amounts due to banks
107,617
107,617
Payables from securities financing transactions measured at amortized cost
11,911
11,911
Cash collateral payables on derivative instruments
10,939
10,939
Customer deposits
183,119
183,119
Debt issued measured at amortized cost
110,491
110,491
Other financial liabilities measured at amortized cost
7,992
7,992
Total financial liabilities measured at amortized cost
432,070
432,070
Financial liabilities at fair value held for trading
5,711
5,711
Derivative financial instruments
66,091
1,691
2
67,782
Brokerage payables designated at fair value
316
316
Debt issued designated at fair value
44,909
44,909
Other financial liabilities designated at fair value
7,574
7,574
Total financial liabilities measured at fair value through profit or loss
124,601
1,691
126,292
Provisions and contingent liabilities
11,052
(1,107)
2, 4
9,945
Other non-financial liabilities
3,888
13
3,901
Total liabilities
571,611
598
572,209
Non-controlling interests
(285)
(285)
Fair value of net assets acquired
32,771
(1,177)
31,594
Settlement of pre-existing relationships
135
135
Provisional negative goodwill resulting from the acquisition
28,925
(1,177)
27,748
1 Refer to Note 10 for information about credit quality of financial assets, including purchased credit-impaired
 
positions.
 
 
 
 
 
 
 
 
 
The table below provides details of the measurement
 
period adjustments shown above.
Reference
 
Measurement period adjustment
2
The application of measurement period adjustments
 
to the accounting for the acquisition of the
 
Credit Suisse Group resulted in the
following classification and measurement changes
 
in accordance with IFRS 9 in 2023, with respective
 
application in the acquisition date
balance sheet:
–
USD
14.3
bn of loans and advances to customers
 
and USD
12
m of other financial assets measured at amortized
 
cost in Non-core and
Legacy previously reported in the UBS Group second quarter
 
2023 report as accounted for on an amortized-cost
 
basis were
reclassified in the UBS Group third and fourth quarter 2023
 
reports to financial assets measured at fair value held
 
for trading;
 
–
USD
27.5
bn notional value of loan commitments and
 
a corresponding USD
2.0
bn fair value, previously not subject to ongoing
remeasurement at fair value, were reclassified to derivative loan
 
commitments measured at fair value through profit or loss in the
 
UBS
Group third quarter 2023 report; and
–
USD
0.3
bn of derivative liabilities decreased, with
 
a corresponding decrease of USD
0.3
bn in financial assets measured at fair value
held for trading in the acquisition date balance
 
sheet, in the UBS Group fourth quarter 2023 report.
As a consequence of the classification and
 
measurement adjustments, USD
0.1
bn of stage 1 and 2 expected credit losses
 
have been
reversed from the income statement and, accordingly, a USD
0.1
bn increase in net profit recognized in the second quarter of
 
2023.
 
Additionally, interest income of USD
0.2
bn for the quarter ended 30 September
 
2023 (USD
0.1
bn for the quarter ended 30 June 2023)
was reclassified from
Interest income from financial instruments
 
measured at amortized cost and fair value
 
through other
comprehensive income
 
to
Net interest income from financial instruments
 
measured at fair value through profit or loss
 
and other
, with
no impact on
Net interest income
.
3
A reclassification of USD
7.1
bn of financial assets reported at fair value not
 
held for trading to financial assets at fair value
 
held for
trading was performed in the fourth quarter of
 
2023 to align with the presentation approach followed
 
by the UBS Group.
4
After the publication of the UBS Group fourth quarter
 
2023 report and following the completion
 
of detailed assessments and reviews of
acquisition date fair values, several measurement
 
period adjustments were approved by management,
 
mainly resulting in the following
changes:
–
a USD
0.3
bn decrease in the fair value for loans and advances
 
to customers measured at amortized cost
 
as of 31 May 2023 mainly
following individual counterparty credit assessments;
 
and
–
a USD
0.9
bn increase in provisions and contingent liabilities related
 
to litigation recognized in accordance with IFRS 3 as of
 
31 May
2023 following further comprehensive reviews, including
 
of additional information, which impact
 
the assessment of possible and
probable outcomes as of the acquisition date. USD
0.8
bn of the USD
0.9
bn increase relates to contingent liabilities, with the
remaining USD
45
m from litigation provisions.
These changes have resulted in a net USD
1.2
bn reduction to negative goodwill resulting from the
 
acquisition compared with the
amount originally published in the UBS Group second
 
quarter 2023 report.
Determination of negative goodwill
The acquisition of the
 
Credit Suisse Group on 12 June
 
2023 resulted in provisional negative goodwill
 
of USD
27.7
bn. This
negative
 
goodwill
 
represents
 
the
 
difference
 
between
 
the
 
fair
 
values
 
for
 
the
 
identifiable
 
assets
 
acquired
 
and
 
liabilities
assumed,
 
except
 
for
 
amounts
 
related
 
to leases
 
and
 
employee
 
benefits,
 
which
 
have
 
been
 
determined
 
by applying
 
the
requirements in IFRS 16 and IAS 19, respectively,
 
and consideration transferred.
The USD
27.7
bn provisional negative
 
goodwill is USD
1.2
bn lower than the
 
previously reported USD
28.9
bn provisional
negative
 
goodwill
 
following
 
further
 
measurement
 
period
 
adjustments
 
concluded
 
after
 
publication
 
of
 
the
 
UBS
 
Group
fourth quarter 2023 report as detailed in the table above.
 
The negative goodwill
 
has been recognized
 
as of
 
the acquisition
 
date in
 
the income
 
statement on
 
a separate line,
Negative
goodwill
. The pre-tax gain arising
 
from negative goodwill on
 
the acquisition of the
 
Credit Suisse Group did not
 
result in
any tax expense.
Acquisition-related costs to effect the acquisition
 
UBS incurred
 
certain acquisition-related
 
costs to
 
effect
 
the acquisition.
 
These consisted
 
primarily of
 
advisory,
 
legal and
consulting
 
fees.
 
These
 
costs
 
were
 
expensed
 
as
 
incurred.
 
In
 
2023,
 
a
 
total
 
of
 
USD
0.2
bn
 
was
 
included
 
in
General
 
and
administrative expenses
 
in the income statement.
 
Derecognition of loans and loan commitments
During the second half of 2023, the Group recognized gains on the early termination and natural roll-off, accelerated by
actions
 
to
 
actively
 
unwind
 
the
 
portfolio
 
in
 
Non-core
 
and
 
Legacy
 
on
 
loans
 
and
 
loan
 
commitments
 
of
 
USD
0.1
bn
 
and
USD
0.6
bn, respectively.
Pro forma financial information
From the
 
date of acquisition
 
until 31 December
 
2023, the Credit
 
Suisse Group
 
contributed USD
7.6
bn of net
 
revenues
and an
 
overall net
 
loss of
 
USD
3.5
bn to
 
the net
 
profit
 
of the
 
UBS Group.
 
For illustration
 
purposes, the
 
pro
 
forma net
revenues and net
 
loss for the
 
UBS Group for
 
the year ended
 
31 December 2023 if
 
the business combination
 
had taken
place on 1 January 2023 are estimated as USD
46.1
bn and USD
2.1
bn, respectively.
This pro forma
 
information is based
 
on the actual
 
annual results of
 
the consolidated UBS
 
Group, as reported
 
(including
Credit Suisse for the seven months since the acquisition), and the Credit Suisse
 
US GAAP results for the first five months
of 2023,
 
adjusted for
 
the estimated
 
effect of
 
conversion to
 
IFRS Accounting
 
Standards and
 
the effects
 
from purchase
price allocation adjustments under IFRS 3,
Business Combinations
.
 
The pro forma net
 
revenues and net
 
loss exclude the
 
impact from negative goodwill
 
recognized from the
 
acquisition of
the Credit
 
Suisse Group
 
of USD
27.7
bn and
 
certain items
 
recognized by
 
the Credit
 
Suisse Group
 
in 2023
 
prior
 
to the
acquisition date, including a gain from the write-down of additional tier 1 (AT1) capital notes of USD
16.4
bn, a goodwill
impairment charge, mostly related to Wealth Management (Credit Suisse),
 
of USD
1.4
bn and a gain from the reversal of
contingent
 
compensation
 
award
 
accruals
 
of
 
USD
0.4
bn.
 
These
 
items
 
are
 
considered
 
non-recurring
 
and
 
therefore
 
not
representative of the normal course of business.
 
The pro forma net revenues and net loss do not purport to represent what UBS’s actual results of
 
operations would have
been had
 
the transaction occurred
 
on the
 
date indicated, nor
 
are they
 
necessarily indicative of
 
future results of
 
operations.
The
 
pro forma
 
net
 
revenues
 
and net
 
loss also
 
do not
 
consider
 
any
 
potential impacts
 
of current
 
market
 
conditions on
revenues, assets or liabilities.
 
Nor do they reflect
 
expense efficiencies, asset dispositions
 
or business reorganizations that
are or
 
may be contemplated,
 
or any
 
cost or revenue
 
synergies, including further
 
potential restructuring actions,
 
associated
with the acquisition of the Credit Suisse Group.
 
Segment reporting – integration of UBS’s and Credit Suisse’s
 
businesses and establishment of Non-core and
Legacy
 
Prior to the
 
third quarter of
 
2023, UBS’s businesses
 
were organized globally
 
into four business
 
divisions (Global Wealth
Management,
 
Personal
 
&
 
Corporate
 
Banking,
 
Asset
 
Management
 
and
 
the
 
Investment
 
Bank),
 
each
 
qualifying
 
as
 
a
reportable
 
segment,
 
and
 
Group
 
Functions.
 
Credit
 
Suisse’s
 
businesses
 
were
 
organized
 
globally
 
into
 
five
 
reportable
segments
 
(Wealth
 
Management
 
(Credit
 
Suisse),
 
Swiss
 
Bank (Credit
 
Suisse),
 
Asset
 
Management
 
(Credit
 
Suisse),
 
the
Investment Bank (Credit Suisse) and the Capital Release
 
Unit (Credit Suisse)), and the Corporate Center (Credit Suisse).
 
As the
 
integration
 
of
 
the
 
UBS
 
and
 
Credit
 
Suisse
 
businesses
 
continues,
 
beginning
 
with
 
the
 
third
 
quarter
 
of
 
2023, the
Group
 
reports
 
five
 
business
 
divisions,
 
each
 
of
 
which
 
qualify
 
as
 
a
 
reportable
 
segment:
 
Global
 
Wealth
 
Management,
Personal & Corporate Banking, Asset Management, the Investment
 
Bank, and Non-core and Legacy.
 
Non-core and Legacy includes positions and businesses not aligned with the Group’s strategy and policies. Those consist
of
 
the
 
assets
 
and
 
liabilities
 
reported
 
as
 
part
 
of
 
the
 
former
 
Capital
 
Release
 
Unit
 
(Credit
 
Suisse)
 
and
 
certain
 
assets
 
and
liabilities of the
 
former Investment
 
Bank (Credit Suisse),
 
Wealth Management
 
(Credit Suisse), Swiss
 
Bank (Credit Suisse)
and Asset Management (Credit Suisse) divisions, as well as of the former Corporate Center (Credit Suisse). Also included
are the remaining
 
assets and liabilities
 
of UBS’s
 
Non-core and
 
Legacy Portfolio,
 
previously reported
 
in Group Functions,
and smaller amounts of assets
 
and liabilities of UBS’s
 
business divisions that have
 
been assessed as not
 
strategic in light
of the acquisition of the Credit Suisse Group.
Group Functions has been renamed Group Items and excludes UBS’s former Non-core
 
and Legacy Portfolio and includes
certain of the assets and liabilities of the former Corporate
 
Center (Credit Suisse).
The
 
above
 
reflects
 
how
 
financial
 
information
 
is
 
presented
 
effective
 
from
 
the
 
third
 
quarter
 
of
 
2023
 
in
 
the
 
internal
management reports to the Group Executive
 
Board, which is considered the
 
“chief operating decision-maker”
 
pursuant
to IFRS 8,
Operating Segments
.
 
Information for prior periods has been revised and presents
 
Non-core and Legacy separately from Group Items.
As UBS
 
executes its
 
integration plans,
 
the expectation
 
is that
 
allocation methodologies
 
for profit
 
and loss
 
and balance
sheet to the business divisions and into Group Items will
 
continue to be reviewed and refined.
›
Refer to Note 3 for more information
 
›
Refer to the “Acquisition and integration
 
of Credit Suisse” section and the “Our businesses”
 
section for more information about
Non-core and Legacy and other changes in the composition
 
of reportable segments in 2023
Pre-existing relationships
 
As of 12 June 2023, UBS had the following pre-existing
 
relationships with the Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
USD m
Cash collateral receivables on derivative instruments
7
Derivative financial instruments
1,476
Debt instruments issued by the Credit Suisse Group and held
 
by UBS
98
Total assets
1,581
Cash collateral payables on derivative instruments
572
Derivative financial instruments
813
Total liabilities
1,385
Treasury shares
(61)
Total equity
(61)
Total net pre-existing relationships
135
Such balances are eliminated in the consolidated financial
 
statements.
Retention awards
 
of approximately
 
USD
0.5
bn were
 
offered to
 
selected employees
 
of the
 
Credit Suisse
 
Group prior
 
to
the acquisition date to support the completion of the transaction and the early
 
phase of integration. These awards were
contingent
 
on
 
the
 
completion
 
of
 
the
 
acquisition
 
and
 
are
 
delivered
50
%
 
in
 
cash
 
(in
 
general
 
vesting
60
 
days
 
from
 
the
completion of
 
the acquisition)
 
and
50
% in
 
shares (in
 
general vesting
 
on the
 
first anniversary
 
of the
 
completion of
 
the
acquisition).
 
Vesting
 
periods
 
are
 
longer
 
for
 
certain
 
regulated
 
employees.
 
Expenses
 
associated
 
with
 
these
 
awards
 
are
recognized between the date of acquisition and the applicable
 
vesting dates and were USD
0.3
bn in 2023.