UBS Group AG

Execution risk from the integration and restructuring of Credit Suisse is the main consideration for our ratings on UBS Group AG. The negative outlook reflects risks to the franchise's strengths, profitability, and funding, alongside potential tail risks from winding down a large part of Credit Suisse's investment banking activities. We could revise down our assessment of the stand-alone credit profile (SACP) from 'a' and lower our rating if we think UBS's financial profile has weakened because of the merger, or if the integration reveals greater risks than we currently expect. In this scenario, we would also lower our issue ratings on all related instruments, including hybrid capital. We could revise the outlook to stable if we believe execution risks related

...UBS Group AG (UBS; the group) is on track to integrate and restructure Credit Suisse's operations. The group aims to substantially complete the integration of Credit Suisse by year-end 2026. We think final shift in the risk and governance mindset at Credit Suisse is likely to take longer, but we acknowledge the progress, as the group has fully aligned risk frameworks in 2023. We believe that UBS' management has the expertise and capacity to execute on the cultural transformation. We also consider the group is progressing quickly to reduce complexities and establish an aligned risk guidance throughout the group. We think risks related to the valuations of the Credit Suisse assets are increasingly more transparent and unlikely to affect the group's strong capital. UBS' results for 2023 indicate that financial losses related to Credit Suisse's assets are likely to be covered by existing buffers, even in a moderate stress scenario. For 2023, the group reported a common equity tier 1 (CET1)...

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