UBS tells SEC it expects $17B hit for taking over Credit Suisse

May 17 (UPI) -- Swiss investment giant UBS revealed that its emergency takeover of rival Credit Suisse with have a negative impact of $17 billion in a new filing late Tuesday with the U.S. Securities and Exchange Commission

UBS said in the filing that the total negative impact is hovering around $13 billion in fair value adjustments of combined assets and liabilities along with a possible $4 billion from litigation and regulatory costs.

The bank said, though, it will offset the loss by noting a one-time $34.8 billion gain from the acquisition of Credit Suisse assets for a lower cost, in what is called "negative goodwill."

UBS told the SEC that it had little time to conduct due diligence for the Credit Suisse takeover in March due to the "emergency circumstances" surrounding its competitor. The four-day takeover was meant to stabilize the financial markets, which had the potential to roil investment firms around the world.

UBS got involved in the deal at the behest of the Swiss government and now realizes that it is costing more than originally thought during negotiations. Originally, it anticipated the deal would cost between $1.1 billion and $3.3 billion.

"If the circumstances of the due diligence affected UBS Group AG's ability to thoroughly consider Credit Suisse's liabilities and weaknesses, it is possible that UBS Group AG will have agreed to a rescue that is considerably more risky than it had contemplated," UBS said in the filing.

Last month, UBS reported that its net profit tumbled more than 50% in the first three months of this year to $1.04 billion. The fall was due not to its emergency takeover in March of troubled rival Credit Suisse, but the setting aside of $665 million in provisions to cover costs arising from a lawsuit related to U.S. mortgage-backed securities dating back to the financial crisis.

UBS last week said it will appoint Credit Suisse CEO Ulrich Korner to its Group Executive Board, pending closure of the merger.