Swiss banking giant UBS Group AG (NYSE:UBS) recently revealed that it anticipates a financial hit of approximately $17 billion from its takeover of Credit Suisse Group AG (NYSE:CS). The charges consist of $13 billion attributed to fair value adjustments, along with an additional $4 billion earmarked for potential litigation and regulatory costs.
The Swiss bank notified its investors about the lack of due diligence on the deal due to “emergency circumstances.” Coordinated by the Swiss government, the merger agreement between the two banks was announced in March 2023, after the collapse of Credit Suisse.
According to a regulatory filing, UBS Group was compelled to hastily acquire its rival, Credit Suisse, in a deal it did not originally desire. The worsening financial situation of Credit Suisse amidst a global banking crisis prompted authorities to take swift action.
On the plus side, the bank anticipates a gain of $34.8 billion on negative goodwill from this acquisition, as it acquired Credit Suisse at a considerably lower value than its recorded book value.
Yesterday, UBS stock experienced a decline of 1.44%. However, over the past six months, the stock has gained 7.3%.
Is UBS Group AG a Buy or Sell?
According to TipRanks’ analyst consensus, UBS stock has a Moderate Buy rating. The stock has a total of 10 recommendations, out of which five are Buys.
The average price forecast stands at $25.37, indicating a potential upside of nearly 33% from the current trading levels.