Credit Suisse to book CHF 450m gain in Q4 2019 due to accounting treatment of investment in SIX Group

Maria Nikolova

Credit Suisse has decided to elect fair value accounting under US GAAP in respect of its equity investment in SIX Group AG.

Credit Suisse today announces changes to accounting treatment for its equity investment in SIX Group AG.

Following a review of the accounting treatment of the shares that Credit Suisse holds in the Swiss stock exchange group, Credit Suisse has made the decision to elect fair value accounting under US GAAP in respect of this equity investment.

On the basis of SIX Group’s financial accounts as of June 30, 2019, this is expected to result in a pre-tax gain of at least CHF 450 million in the fourth quarter of 2019, which will be recognised in the corresponding SUB and IWM divisional results. The gain is poised to add approximately 10 bps to Credit Suisse’s year end 2019 CET1 ratio.

Credit Suisse stresses that this is a change in the accounting basis only and that it remains a supportive long term shareholder of SIX Group AG, having increased its holding to 15% in recent years.

Let’s note that SIX has recently announced an all-cash voluntary tender offer for 100% of the share capital of BME for EUR 34.00 per share, implying a total equity value of EUR 2,843 million (CHF 3,108 million).

Credit Suisse is providing SIX with a fully underwritten bridge facility for the funding need of the proposed transaction (assuming 100% acceptance level). The bridge facility is expected to be refinanced by an optimal mix of existing resources and long-term debt market instruments.

Credit Suisse is also acting as an adviser to SIX regarding the deal.

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