6-K
UBS Group AG (UBS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: March 28, 2024
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive offices)
Commission File Number: 1-36764
Indicate by check mark whether the
registrant files or will file annual reports under
cover of
Form 20-F or Form 40-
F.
Form 20-F
☒
Form 40-F
☐
THIS
FORM
6-K
IS
HEREBY
INCORPORATED
BY
REFERENCE
INTO
(1)
THE
REGISTRATION
STATEMENTS
OF UBS
GROUP
AG ON
FORM
F-3 (REGISTRATION
NUMBER
333-272452)
AND
ON FORM
S-8 (REGISTRATION NUMBERS 333-200634; 333-200635;
333-200641;
333-200665;
333-215254;
333-215255;
333-228653; 333-230312; 333-249143 AND 333-272975), AND INTO EACH PROSPECTUS OUTSTANDING
UNDER THE FOREGOING REGISTRATION STATEMENT.
THIS REPORT SHALL BE A PART THEREOF
FROM THE DATE ON WHICH THIS REPORT
IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY
DOCUMENTS OR REPORTS
SUBSEQUENTLY
FILED OR FURNISHED.
EXPLANATORY
NOTE
UBS Group AG
has determined that, pursuant
to Rule 3-05
and Article 11 of
Regulation S-X, the merger
with Credit
Suisse Group AG
that occurred on
12 June 2023
requires it
to incorporate
unaudited
pro forma
condensed combined financial information prepared to reflect the merger in the outstanding registration
statements indicated on the cover of this Form 6-K. Such pro forma
financial information is based on (i)
the audited consolidated income statement of UBS
Group AG for the
year ended 31 December 2023 and
(ii) the unaudited
historical condensed consolidated income statement of
Credit Suisse Group
AG for the
five-month
period
ended
31
May
2023
derived
from
Credit
Suisse’s
books
and
records,
and
other
information
available,
is
presented
for
illustrative
purposes
only
and
does
not
reflect
the
results
of
operations or the financial position of
UBS Group AG that would have
resulted had the merger occurred
on 1 January
2023, or project
the results of
operations or
financial position
of UBS Group
AG for any
future date or period.
The unaudited
pro forma condensed
combined income statement
for the
year ended 31
December 2023 is
attached hereto as Exhibit 99.1 to this
report on Form 6-K.
EXHIBIT INDEX
Exhibit No.
99.1
Unaudited pro forma condensed combined financial information for the fiscal year ended 31
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrants
have duly
caused this report to be signed on their
behalf by the undersigned, thereunto
duly authorized.
UBS Group AG
By: _/s/ Steffen Henrich__________
Name: Steffen Henrich
Title: Group Controller
By: _/s/ David Kelly
___
Name:
David Kelly
Title:
Managing Director
Date:
March 28, 2024
exhibit991
1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
All amounts in this section are in US dollars (USD) unless otherwise specified.
The abbreviation “bn” is used to represent
“billion”. The abbreviation “CHF” is used to represent “Swiss francs”. Numbers
presented throughout this section may not add up
precisely to the totals provided in the tables and text due to rounding.
The following unaudited pro forma financial information has been derived
from (i) UBS Group AG’s historical audited financial
statements for the year ended 31 December 2023 included in our Annual
Report on Form 20-F for the fiscal year ended 31
December 2023, filed with the SEC on 28 March 2024 and (ii) the unaudited
historical condensed income statement of Credit
Suisse Group AG for the period from 1 January 2023 to 31 May 2023 derived
from Credit Suisse’s books and records.
The
following unaudited pro forma financial information gives effect
to the Credit Suisse Group AG acquisition as if the acquisition
was completed on 1 January 2023. A pro forma balance sheet as of 31
December 2023 is not presented or required as the balance
sheet in UBS Group AG’s Annual
Report on Form 20-F for the fiscal year ended 31 December 2023, filed with
the SEC on 28
March 2024, includes the effect of the Credit Suisse Group AG acquisition.
2
Unaudited Pro Forma Condensed Combined Income Statement
for the year ended 31 December 2023
1
Reflects the U.S. GAAP income statement for Credit Suisse Group for
the five-month period ended 31 May 2023, translated
to US dollars using an average rate of 1.09 (CHF/USD) and reflecting presentation
reclassification adjustments applied to
conform with UBS’s consolidated
financial statement presentation. Refer to Note 2 in the explanatory notes for further
information.
2
Refer to Note 3 in the explanatory notes for further information.
See accompanying notes.
3
Explanatory notes to unaudited on pro forma condensed combined
income statement
For the year ended 31 December 2023 (in USDbn except where
otherwise indicated)
Note 1: Basis of preparation
The unaudited pro forma condensed combined income statement for the
year ended 31 December 2023 gives effect to the
acquisition of a 100% ownership interest in Credit Suisse by UBS under
the acquisition method of accounting, as if it had closed
on 1 January 2023.
The unaudited pro forma condensed combined income statement
was prepared by UBS based on the audited consolidated income
statement of UBS for the year ended 31 December 2023 and based on
the unaudited historical condensed income statement of
Credit Suisse for the five-month period ended 31 May 2023, derived from
Credit Suisse’s books and records,
and other
information available. With the acquisition
date of 12 June 2023, for convenience the Credit Suisse Group was consolidated
with
effect from 31 May 2023, as the effect of transactions
and activities in the period from 31 May 2023 to 12 June 2023 on the
consolidated financial statements was not material.
The unaudited pro forma condensed combined income statement
should therefore be read in conjunction with the following
consolidated income statements, including the notes thereto:
•
the audited consolidated income statement of UBS Group AG for the year
ended 31 December 2023, which has been
prepared in accordance with IFRS Accounting Standards and included
in the UBS Group AG Form 20-F for the year
ended 31 December 2023; and
•
the unaudited historical condensed consolidated income statement of
Credit Suisse Group AG for the five-month
period ended 31 May 2023, which has been prepared in accordance with
U.S. GAAP,
derived from Credit Suisse’s
books and records.
The Credit Suisse historical consolidated income statement was prepared
in accordance with U.S. GAAP and presented in Swiss
francs (CHF). For purposes of the unaudited pro forma condensed combined
income statement,
this income statement has been
adjusted to conform to the recognition, measurement and presentation requirements
of IFRS Accounting Standards,
as applied by
UBS, presented in US dollars (USD), which is the presentation currency of
UBS. Income statement information available for
Credit Suisse in CHF has been translated to USD using an average rate of 1.09
(CHF/USD) for the five-month period ended 31
May 2023.
Note 2: Presentation reclassification adjustments
Presentation reclassification adjustments have been applied to the Credit Suisse income
statement information for the five-month
period ended 31 May 2023 in order to conform with UBS’s
consolidated income statement presentation.
The table below shows the reclassification of the historical Credit Suisse Group
AG income statement lines for the five-month
period ended 31 May 2023 from the U.S. GAAP presentation (horizontal
captions and amounts) to the respective UBS Group AG
income statement structure (U.S. GAAP reclassified) (vertical captions
and amounts). The Credit Suisse Group AG income
statement amounts are presented in USD and have been translated from
CHF as indicated in Note 1 above.
4
Credit Suisse AG consolidated income statement for
five-month period ended 31 May 2023
5
Note 3: Transaction
accounting adjustments
Transaction accounting adjustments include
certain pro forma preliminary adjustments to conform Credit Suisse Group
AG’s
income statement for the five-month period ended 31 May 2023 to UBS’s
IFRS accounting policies and acquisition-related
adjustments which assume the acquisition was completed on 1 January 2023.
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. Due to the complexity and
size of the transaction and the integration
process, it is possible that new information
about relevant facts and circumstances on the acquisition date becomes available to
the
management after the date of issuance of this unaudited pro forma condensed
combined income statement information.
Consequently,
the amounts that form part of the business combination accounting (as described in
Note 2 of the audited financial
statements of UBS Group AG as of and for the year ended 31 December 2023)
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.
All adjustments have been considered on a pre-
and post-tax basis and where an estimated impact on income taxes has been
identified this is reflected in Note 3l). This assessment included
certain assumptions and represents UBS’s best estimate
as to the
likely tax impacts. The assessment could change as further information becomes available,
including how the entities and
businesses in each location will be reorganized, receipt of revised profit
forecasts for those entities, and discussions with the
relevant tax authorities.
The following notes reference the pro forma condensed combined income
statement of Credit Suisse Group AG for the five-
month period ended 31 May 2023, which is included earlier in this section.
a)
Adjustments have been made to reflect the reversal of material Credit Suisse Group
AG revenues and expenses that
occurred in the five-month period prior to the legal merger date (12
June 2023) and therefore are already included in
the calculation of negative goodwill recognized by UBS Group AG upon
the merger:
i.
16.4bn gain in Credit Suisse from the write-down of additional tier 1 (AT1)
capital notes;
ii.
1.4bn goodwill impairment charge in Credit Suisse, mostly
related to its Wealth Management
division;
and
iii.
0.4bn gain in Credit Suisse from the cancellation of contingent compensation
award accruals.
These effects have been removed to avoid a material double counting
of revenue and expense effects in the unaudited
pro forma condensed combined income statement.
Adjustments reflecting incremental accretion, amortization
and depreciation for the five-month period ended 31 May 2023
arising from the purchase price allocation (as if the merger would
have been closed on 1 January 2023):
b)
An adjustment has been made to reflect an estimated additional five
months of incremental accretion income from the
fair value discount arising from the provisional purchase price allocation
for loans measured at amortized cost and
unfunded loan commitments not measured at fair value (as if the merger
would have closed on 1 January 2023). This
adjustment represents an estimate based on contractual maturities of the
relevant loans and unfunded loan
commitments. This has resulted in an increase to pro forma income of 934m for
the five-month period ended 31 May
2023,
comprised of the following:
i.
652m accretion income on the provisional fair value discount to on-balance
sheet loan portfolios where
there is an intent to hold the portfolio to maturity.
This discount is being accreted to par over the loan
portfolios’ expected lives through “Net interest income”. The estimate of
accretion income assumes that
UBS will continue to hold the loan portfolios
to maturity. Any subsequent
change in the business model,
substantial modifications to the contractual terms or repayments before
contractual maturity of the loans
will have an impact on the timing of recognition of the estimated accretion
income, and such impact may be
material.
ii.
282m accretion income on the provisional fair value discount on unfunded
loan commitments that are
recognized within the balance sheet as “Provisions” (this excludes unfunded
loan commitments which are
measured at fair value), where there is an intent to hold the commitment to maturity.
This discount is being
accreted over the unfunded loan commitments’ expected lives through “Net fee
and commission income”.
The estimate of accretion income assumes that UBS will continue to hold
the unfunded loan commitments
to maturity. Any subsequent
change in the business model, substantial modifications to the contractual
terms or termination before contractual maturity of the unfunded
loan commitments will have an impact on
the timing of recognition of the estimated accretion income, and such
impact may be material.
6
Estimated accretion income for the loan portfolio at amortized cost
and unfunded loan commitments not measured at
fair value over a five-year horizon:
c)
An adjustment has been made to reflect an estimated additional five
months of incremental accretion expense from
the net fair value discount arising from the provisional purchase price allocation
for debt issued (as if the merger
would have closed on 1 January 2023). This has resulted in a decrease
to pro forma “Net interest income” of 74m for
the five-month period ended 31 May 2023. The estimated accretion is calculated
with reference to the contractual
maturity of the instruments issued.
d)
A 305m adjustment has been made in “Depreciation, amortization and
impairment of non-financial assets” to reflect
the estimated reduction of amortization expense in the first five months
of 2023 if the fair value discount arising from
the provisional purchase price allocation on software was applied on 1
January 2023 (as if the merger would have
closed on 1 January 2023).
e)
A
47m adjustment has been made to reflect an estimated additional five
months of estimated incremental amortization
expense for core deposit, customer relationship and trademark intangible assets, which
were newly recognized as part
of the acquisition. These new intangibles are amortized on a straight-line basis over
their useful lives ranging from 2
to 10 years and the expense is recognized within “Depreciation, amortization
and impairment of non-financial assets”.
Adjustments reflecting the alignment of Credit Suisse’s
U.S. GAAP accounting policies with UBS’s
IFRS accounting
policies,
along with other adjustments related to purchase accounting for the five-month
period ended 31 May 2023 (as if
the merger would have closed on 1 January 2023):
f)
An adjustment has been made to “Personnel expenses” to reflect an estimated
160m of additional net pension expense
arising from a difference in the requirements for measurement of
the expected return on pension plan assets,
recognition of changes to past service costs and recognition of actuarial
gains/losses in connection with post-
employment benefits between U.S. GAAP and IFRS Accounting
Standards for the five-month period ended 31 May
2023.
g)
The U.S. GAAP cash flow hedge Other Comprehensive Income (“OCI”) balance
of Credit Suisse Group AG was set
to zero as of the Group merger date, which, for the purpose of the
pro forma condensed combined income statement,
was as of 1 January 2023. An adjustment has been made to “Net interest income”
to reflect the reversal of an
estimated 138m loss related to the difference between
the amortization of cash flow hedge OCI under U.S. GAAP and
the estimated amount that would have been recognized for the five-month
period ended 31 May 2023 following the
reset of the cash flow hedge OCI balance to zero.
h)
Under U.S. GAAP,
recycling of own credit gains and losses to the income statement is recognized
upon derecognition
of the related financial instrument. Under IFRS Accounting Standards
there is no recycling to the income statement
and the balances are recognized and remain in retained earnings within equity.
An estimated adjustment of 133m for
the five-month period ended 31 May 2023 has been made to “Other net
income from financial instruments measured
at fair value through profit or loss” to reverse the gains recognized in the income
statement under U.S. GAAP for the
Credit Suisse Group AG.
i)
An adjustment has been made to “Personnel expenses” to reflect an estimated
net reduction of 100m in variable
compensation expense. The adjustment is due to lower estimated deferred
amortization expenses were there to have
been a recalibration of share awards to the fair value of UBS Group AG shares
on the Credit Suisse acquisition date,
as well as other adjustments, partly offset by the estimated effects
of applying the UBS compensation and deferral
framework to annual incentive awards for 2023 for the five-month period
ended 31 May 2023, and retention awards
granted in connection with the Credit Suisse acquisition.
7
j)
Under IFRS Accounting Standards, Day 1 gains on financial instruments,
after taking account of any valuation
adjustments, are recognized in the income statement only when their
fair value is evidenced by an observable market
source. A similar restriction does not exist under U.S. GAAP.
On this basis, a debit adjustment of 86m has been
recognized in the pro forma condensed combined income statement (“Other
net income from financial instruments
measured at fair value through profit or loss”) for the five-month period
ended 31 May 2023.
k)
An adjustment to reflect a 49m credit to “Credit loss expense / (release)” has
been made, representing a removal of
non-specific provisions for expected credit losses recognized
under U.S. GAAP for the five-month period ended 31
May 2023. As a result of the application of acquisition accounting under
IFRS 3, all existing credit loss allowances
and provisions
under U.S. GAAP as of the acquisition date have been reset to nil. As required by IFRS 9, for
performing exposures, i.e., IFRS 9 stage 1 and 2, expected credit losses have been subsequently
recognized post the
application of acquisition accounting during the remaining
seven months of 2023, and materially represent the
expected credit loss expense for the full year 2023 as if the acquisition has occurred
on 1 January 2023. Specific credit
loss allowances and provisions on non-performing exposures, i.e. IFRS 9 stage
3, recognized for the first five months
of 2023 of 91m have been retained as a credit loss expense.
l)
Income tax expense / (benefit) has been analyzed in light of the pre-tax adjustments
made in the unaudited condensed
combined pro forma income statement. A pro forma debit adjustment of 85m
has been reflected in “Tax
expense /
(benefit)” for the estimated pre-tax pro forma adjustments that relate to legal
entities whose tax positions give rise to a
tax impact.
All pro forma pre-tax adjustments for Credit Suisse Group AG for the
five-month-period ended 31 May 2023 have
been considered and no additional tax expense or benefit to the 85m above has been
recognized in connection with the
pre-tax adjustments in the pro forma condensed combined income statement
as it is assumed that the other pre-tax
adjustments will either not be recognized for tax purposes, or they will generally
relate to entities with tax losses
carried forward that are not recognized as deferred tax assets. This assessment includes
assumptions and represents
UBS Group AG’s best estimate as to the
likely tax impacts. The assessment could change as further information
becomes available, including how the entities and businesses of Credit Suisse Group
AG in each location will be
reorganized, receipt of revised profit forecasts for those entities, and
discussions with the relevant tax authorities.
Note 4: Earnings per share
Pro forma earnings / (loss) per share (referred to as “EPS”) for the pro forma
condensed combined income statement have been
recalculated to show the impacts of the transaction after giving effect
to the UBS shares transferred to Credit Suisse shareholders,
using the exchange ratio defined and assuming that the UBS shares to be transferred
to Credit Suisse shareholders in connection
with the transaction were outstanding at the beginning of the period presented.
For the purposes of the unaudited pro forma diluted EPS calculation, there
is assumed to be no effect from anti-dilutive potential
ordinary shares.
The pro forma adjustment to increase the weighted average outstanding
shares by 73m represents the transfer of UBS treasury
shares in connection with the Credit Suisse acquisition as if the transfer
took effect on 1 January 2023 instead of the actual transfer
date of 12 June 2023.