Moody’s changes UBS’ outlook to negative from stable

Moody’s Investors Services affirmed its ratings of UBS Group AG while changing its outlook on the long term deposit and senior unsecured ratings from stable to negative.
The action comes after UBS agreed to acquire Credit Suisse for $3.2 billion as regulators look to shore up confidence in the global banking system.
“Despite the eventual franchise benefits, Moody’s also notes that the transaction poses significant financial, cultural and franchise related integration challenges for UBSG,” it said in the note.
Moody’s listed the need to retain Credit Suisse personnel in the process of the deal, working on minimizing losses on overlaps in clients in businesses and the need to unify the two companies’ cultures as the challenges that UBS would face.
It voiced more optimism for its wealth management business from the deal than its investment banking.
“Moody’s believes that the acquisition of CSG has the potential, in due course, to significantly enhance UBSG’s franchise in wealth management, Swiss banking, asset management and to a lesser degree in investment banking, whilst targeting a reduction of operating costs by more than $8 billion,” it said. $Credit Suisse(CS.US)$ $UBS Group(UBS.US)$ $First Republic Bank(FRC.US)$ $Bank of America(BAC.US)$