Accounting for the acquisition of Credit Suisse Group	6 Months Ended
Accounting for the acquisition of Credit Suisse Group	Jun. 30, 2024
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 acquisition of Credit Suisse Group AG constituted a business combination under IFRS 3, Business Combinations , and was required to be accounted for by applying the acquisition method of accounting. IFRS 3 measurement period adjustments for the acquisition of the Credit Suisse Group The acquisition of Credit Suisse Group 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 as of the acquisition date was 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, with the amounts that form part of the business combination accounting therefore considered provisional and subject to further measurement period adjustments if new information about facts and circumstances existing on the date of the acquisition were to be obtained within one year from the acquisition date. The acquisition of Credit Suisse Group AG resulted in provisional negative goodwill of USD 27.7 bn reported in the UBS Group Annual Report 2023. For details of the accounting for the acquisition, including measurement period adjustments effected during the year ended 31 December 2023, refer to “Note 1a Material accounting policies” and “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023. In the second quarter of 2024, in light of the additional information about circumstances existing on the acquisition date that became available to management, IFRS 3 measurement period adjustments of USD 0.2 bn were made in relation to Provisions and contingent liabilities (refer to “Change in provisions and contingent liabilities” below). In addition, fair value measurement adjustments of USD 0.3 bn were made to the acquisition date fair values of exposures associated with Russia, as well as other positions in Non-core and Legacy, following the completion of a detailed review. The adjustments reflect management’s final conclusions on critical assumptions and judgments, which are within a range of reasonably possible outcomes, relating to significant uncertainties that existed on the acquisition date. Comparative-period information has been revised accordingly. The measurement period adjustments effected in the second quarter of 2024 resulted in a decrease in negative goodwill to USD 27.3 bn from the provisional amount of USD 27.7 bn previously reported in the UBS Group Annual Report 2023. Retained earnings have been revised to reflect the impact on the prior-period income statement of net USD 0.5 bn. With the measurement period adjustments effected in the second quarter of 2024 and the finalization of the amount of negative goodwill, the acquisition accounting for the transaction is complete. Change in provisions and contingent liabilities In addition to the existing USD 1.3 bn litigation provisions previously recorded by the Credit Suisse Group, UBS recognized on the acquisition date USD 5.6 bn in Provisions and contingent liabilities for additional litigation provisions and contingent liabilities, which includes USD 1.6 bn for litigation provisions to reflect management’s assessment of the associated probability, timing and amount considering new information, and USD 4.0 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 4.0 bn of contingent liabilities reflect an increase of USD 0.2 bn from the USD 3.8 bn previously reported in the UBS Group Annual Report 2023. Effect of measurement period 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 adjusted to reflect the effects of measurement period adjustments made in the second quarter of 2024, as detailed above. 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 Annual Report 2023 Measurement period adjustment Revised Cash and balances at central banks 93,012 (89) 92,923 Amounts due from banks 13,590 (15) 13,575 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 247,219 (175) 247,044 Other financial assets measured at amortized cost 13,428 (43) 13,385 Total financial assets measured at amortized cost 414,322 (322) 414,000 Financial assets at fair value held for trading 56,237 56,237 Derivative financial instruments 62,162 62,162 Brokerage receivables 366 366 Financial assets at fair value not held for trading 54,199 54,199 Total financial assets measured at fair value through profit or loss 172,964 172,964 Financial assets measured at fair value through other comprehensive income 0 0 Investments in associates 1,569 1,569 Property, equipment and software 6,055 6,055 Intangible assets 1,287 1,287 Deferred tax assets 998 998 Other non-financial assets 6,892 6,892 Total assets 604,088 (322) 603,766 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 67,782 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 126,292 126,292 Provisions and contingent liabilities 9,945 161 10,106 Other non-financial liabilities 3,901 3,901 Total liabilities 572,209 161 572,370 Non-controlling interests (285) (285) Fair value of net assets acquired 31,594 (483) 31,110 Settlement of pre-existing relationships 135 135 Negative goodwill resulting from the acquisition 27,748 (483) 27,264 The tables below set out the consequential impact of the measurement period adjustments on the previously reported income statements for the six-month period ended 30 June 2023 and the quarter ended 30 June 2023, the balance sheets as of 31 March 2024 and 31 December 2023, and the cumulative effect of measurement period adjustments on the statement of cash flows for the six-month period ended 30 June 2023. Effect of the measurement period adjustments on the income statement for the six-month period and the quarter ended 30 June 2023 For the six-month period ended 30 June 2023 For the quarter ended 30 June 2023 USD m Including measurement period adjustments made in the third quarter 2023 Measurement period adjustment made in the Annual Report 2023 Measurement period adjustments made in the second quarter 2024 Revised As previously reported in the third quarter 2023 report Measurement period adjustment made in the Annual Report 2023 Measurement period adjustments made in the second quarter 2024 Revised Net interest income 3,095 3,095 1,707 1,707 Other net income from financial instruments measured at fair value through profit or loss 5,198 5,198 2,517 2,517 Fee and commission income 10,688 10,688 5,635 5,635 Fee and commission expense (954) (954) (507) (507) Net fee and commission income 9,734 9,734 5,128 5,128 Other income 258 258 188 188 Total revenues 18,284 18,284 9,540 9,540 Negative goodwill 28,925 (1,177) (483) 27,264 28,925 (1,177) (483) 27,264 Credit loss expense / (release) 662 662 623 623 Operating expenses 15,696 15,696 8,486 8,486 Operating profit / (loss) before tax 30,852 (1,177) (483) 29,191 29,356 (1,177) (483) 27,695 Tax expense / (benefit) 820 820 361 361 Net profit / (loss) 30,032 (1,177) (483) 28,371 28,995 (1,177) (483) 27,334 Net profit / (loss) attributable to non-controlling interests 11 11 3 3 Net profit / (loss) attributable to shareholders 30,021 (1,177) (483) 28,360 28,992 (1,177) (483) 27,331 Effect of the measurement period adjustments on the balance sheet as of 31 March 2024 and 31 December 2023 USD m As of 31 March 2024 As of 31 December 2023 Assets As previously reported in the first quarter 2024 report Measurement period adjustment made in the second quarter 2024 Revised As previously reported in the first quarter 2024 report Measurement period adjustment made in the second quarter 2024 Revised Total financial assets measured at amortized cost 1,110,067 (322) 1,109,745 1,189,773 (322) 1,189,451 of which: Cash and balances at central banks 271,527 (89) 271,439 314,148 (89) 314,060 of which: Amounts due from banks 22,143 (15) 22,128 21,161 (15) 21,146 of which: Loans and advances to customers 605,283 (175) 605,108 639,844 (175) 639,669 of which: Other financial assets measured at amortized cost 62,750 (43) 62,707 65,498 (43) 65,455 Total assets 1,607,120 (322) 1,606,798 1,717,246 (322) 1,716,924 Liabilities Provisions and contingent liabilities 10,914 161 11,076 12,250 161 12,412 Total liabilities 1,521,354 161 1,521,515 1,630,607 161 1,630,769 Equity Equity attributable to shareholders 85,260 (483) 84,777 86,108 (483) 85,624 of which: Retained earnings 76,436 (483) 75,952 74,880 (483) 74,397 Total equity 85,766 (483) 85,283 86,639 (483) 86,156 Total liabilities and equity 1,607,120 (322) 1,606,798 1,717,246 (322) 1,716,924 Effect of the measurement period adjustments on the statement of cash flows for the six-month period ended 30 June 2023 For the six-month period ended 30 June 2023 USD m As previously reported in the third quarter 2023 report Cumulative measurement period adjustment Revised Cash flow from / (used in) operating activities Net profit / (loss) 30,032 (1,661) 28,371 of which: Negative goodwill (28,925) 1,661 (27,264) Net cash flow from / (used in) operating activities 17,665 17,665 of which: Loans and advances to customers and customer deposits 1,542 714 2,256 of which: Financial assets and liabilities at fair value held for trading and derivative financial instruments (7,050) 1,268 (5,782) of which: Financial assets at fair value not held for trading and other financial assets and liabilities 6,015 (1,982) 4,033 Net cash flow from / (used in) investing activities 104,869 (104) 104,765 of which: Cash and cash equivalents acquired upon acquisition of the Credit Suisse Group 108,510 (104) 108,406 Net cash flow from / (used in) financing activities (25,056) (25,056) Total cash flow Cash and cash equivalents at the beginning of the period 195,321 195,321 Net cash flow from / (used in) operating, investing and financing activities 97,478 (104) 97,374 Effects of exchange rate differences on cash and cash equivalents 2,960 2,960 Cash and cash equivalents at the end of the period 295,759 (104) 295,656 of which: cash and balances at central banks 261,504 (89) 261,415 of which: amounts due from banks 21,996 (15) 21,981 of which: money market paper 12,259 12,259 Conclusion of an investment management agreement with Apollo and the transfer of senior secured asset-based financing In the first quarter of 2024, Credit Suisse entered into agreements with entities managed by Atlas Securitized Products Management Holdings (Atlas) and other affiliates of Apollo Management Holdings (collectively, Apollo) to conclude the investment management agreement under which Atlas has managed Credit Suisse’s retained portfolio of assets of its former securitized products group. Following the closure of this agreement, the assets previously managed by Atlas are to be managed in Non-core and Legacy. The parties also agreed to conclude the transition services agreement under which Credit Suisse has provided services to Atlas. In addition, Credit Suisse AG entered into an agreement with Apollo Capital Management (ACM) and other parties managed, controlled and / or advised by ACM or its affiliates (collectively, the Assignees) to transfer USD 8.0 bn of senior secured asset-based financing, with USD 6.0 bn funded as of 31 December 2023 recognized as financial assets at fair value held for trading at a fair value of USD 5.5 bn and the remaining notional of USD 2.0 bn recognized as derivative loan commitments at a fair value of USD 0.15 bn, with the fair values of both financing components derecognized from the Group’s balance sheet as of 31 March 2024. As part of the loan transfer, the Group extended a one-year senior swingline facility to the Assignees with a total balance as of 30 June 2024 of USD 750 m (31 March 2024: USD 750 m), which is accounted for as an off-balance sheet irrevocable commitment. In the first quarter of 2024, the Group recognized a net gain of USD 0.3 bn from the conclusion of the investment management agreement and the assignment of the loan facilities, after the accounting for the purchase price allocation adjustments at the closing of the acquisition of the Credit Suisse Group.