UBSG: UBS Profits an Enormous $35 Billion from a $3.4 Billion Credit Suisse Deal.

The $17bn impact of the megabank's hurried acquisition of its insolvent rival is, however, significant.

UBS will undoubtedly emerge as a huge winner from the European banking crisis. When the Swiss lending colossus acquired its long-standing rival Credit Suisse in March, it did so hastily and without conducting thorough due diligence. The bank will incur $17 billion in asset write-downs and litigation provisions due to the expedited process.

The good news is that the expense will be mitigated by an accounting gain of up to $35 billion. The amount is a consequence of "negative goodwill" and represents the difference between what UBS paid for Credit Suisse ($3.4bn) and the net assets' fair value ($38bn).

It could be argued that UBS, once again commanded by Sergio Ermotti, made its most lucrative transaction ever. On the one hand, Credit Suisse required immediate rescue or face bankruptcy. On the opposite extreme of the spectrum was a conservative wealth manager with ample state-backed cash who was eager to aggressively mark down assets.