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Tag: UBS

  • UBS Loses Out to Goldman Sachs for NNIP

    UBS Loses Out to Goldman Sachs for NNIP

    Goldman Sachs has bought a Dutch asset manager for which UBS was one of the other bidders as the European sector looks to consolidate.

    U.S. investment bank Goldman Sachs is buying Dutch insurer NN’s asset management business, the companies announced Thursday. European bidders lost out to Goldman Sachs, including Switzerland’s largest bank, UBS.

    Goldman will pay around 1.6 billion euros ($1.9 billion) for NN Investment Partners. The around $355 billion in assets the unit manages will now be added to the $2.3 trillion already managed by the U.S. bank’s fund arm.

    UBS, whose own asset management unit still has not gained the critical mass necessary to be a forerunner in the industry is not only on the lookout for takeover targets but also might be interested in a possible bid for the business.

    Since both Deutsche Bank’s fund unit DWS and UBS both missed out on NN IP, this could fuel speculation about a rapprochement after preliminary talks between the two failed in 2019.

    Credit Suisse Asset Management, which was badly shaken by the closure of its supply chain funds after the collapse of Greensill Capital, is also considered a takeover candidate.

    There is widespread talk of a merger with UBS asset management or DWS joining the two of them. However, Credit Suisse’s chairman, António Horta Osório, intends to take his time mulling major strategic moves until at least the autumn.

    At the end of June, UBS Asset Management had invested assets of $1.2 trillion and CSAM had 471 billion Swiss francs ($519 billion) in client assets under management.

    Even after the Dutch acquisition, Goldman still has plenty of money and is interested in further acquisitions.

    Goldman Sachs CEO David Solomon said the bank would certainly take a serious look at further acquisitions in asset management, if they could accelerate its growth.

    The asset management industry continues to consolidate, he added. If you look at most of the leading players, the thing that most of them have is their businesses are global and at scale.

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  • UBS Launches Wealth Management JV in Japan

    UBS Launches Wealth Management JV in Japan

    UBS and Sumitomo Mitsui Trust further their two-year alliance with the latest launch of a wealth management joint venture in Japan.

    UBS and Sumitomo Mitsui Trust Holdings (SMTH) has launched operations under joint venture UBS SuMi TRUST Wealth Management, according to a statement, across Japan in Tokyo, Osaka and Nagoya.

    The new company is the first in Japan to offer global securities and wealth management capabilities paired with custody, real estate, inheritance, and wealth transfer expertise of a Japanese trust banking group, UBS said.

    UBS and SMTH first announced the establishment of a wealth management alliance in June 2019.

    Soon thereafter, the two groups established a consultation and event organizing company to identify prospective new clients and began cross-selling each other’s products into their respective client bases.

    We knew that with a powerful partner specialized in this unique trust banking market, we could multiply the success we have already achieved organically,» said Victor Chang, UBS SuMi TRUST Wealth Management’s president and representatives director as well as the Japan head of wealth management. «No other wealth manager in Japan boasts the same breadth and depth of our services, not to mention global reach.

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  • SFC Fines UBS Over Regulatory Breaches

    SFC Fines UBS Over Regulatory Breaches

    Hong Kong’s Securities and Futures Commission reprimanded and fined UBS over regulatory breaches covering various areas including transparency client suitability.

    The SFC fined UBS AG and UBS Securities Asia Limited HK$9.8 million ($1.26 million) and $1.75 million, respectively, over various regulatory breaches, according to a statement.

    The issues covered areas ranging from lacking disclosures to client suitability issues.

    The SFC’s probe found that UBS failed to make proper disclosure of its financial interest in some Hong Kong-listed companies covers in its research reports for 14 years, between May 2004 and May 2018.

    The failure was caused by multiple data feed logic errors in a legacy data source used by UBS for tracking its shareholding positions, the securities regulator said.

    The SFC also found that UBS failed to fulfill various processes across client suitability and sales.

    It said the Swiss bank, in various time periods, failed to obtain valid standing authorities from clients who were not qualified as professional investors; record client order instructions; fully assess client derivatives knowledge; and disclose the stop loss event feature in a structured note.

    The SFC considers that UBS failed to act with due skill and care and put in place adequate systems and controls to ensure compliance with the applicable regulatory requirements,» the regulator said in the statement.

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  • UBS and Credit Suisse’s Intertwined Destinies

    UBS and Credit Suisse’s Intertwined Destinies

    It would be premature to draw any conclusions from the large gap that has opened up between UBS and Credit Suisse. Doing so has often proved wrong in the past.

    Credit Suisse will publish second-quarter results this Thursday. It won’t be easy for the bank to exceed UBS’s strong showing, particularly given it still faces enormous problems from the Greensill Capital and Archegos Capital Management losses. Even so, it will be interesting to see how Credit Suisse chief executive Thomas Gottstein takes advantage of the very positive current environment in finance.

    About thirty years ago it wasn’t unusual for both the major banks to coordinate the release of their results. It was a type of good old-fashioned Swiss consensus. One really did want to avoid large discrepancies if possible. The profits of the major banks mirrored each other. And as part of all that, each would advise their (domestic) competitors how much-hidden reserves were being used.

    At the start of the 1990s, increased competition came into play. The Swiss banking cartel was dissolved as banking was liberalized globally and competition law would ban any agreement like that now. In any case, it would be a gargantuan task to balance out the performance between the two this quarter given the disparity between them is so large.

    On one side you have Credit Suisse which keeps getting buffeted by turbulence since former chief executive Tidjane Thiam left. On the other, you have a UBS performing better than it has in years, as the numbers last week clearly show. In short, it would be extremely hard to compare them side by side now.

    But it would be premature to draw conclusions from the conditions at each bank. And any desire to see it last for a prolonged length of time also misses the point.

    Often, such conclusions have turned out to be wrong. UBS and Credit Suisse have closely intertwined destinies and they seem to change positions almost with the regularity of a Swiss watch. One is on top for a while only to then be replaced by the other for another while. History shows that pattern repeating itself over and over.

    Exactly because both banks are so important for Swiss finance, and because their ability to innovate is still pre-dominant, there is little use painting a dire picture of their future or expressing any kind of schadenfreude when one of them is in trouble. The recent events at Credit Suisse have just – again – shown what a lack of responsibility at all levels of a bank can do together with any reasoned, long-term understanding of the banking profession.

    At the end of the day, UBS and Credit Suisse have a long-term responsibility to follow the fundamental rules and laws of the banking business for the Swiss economy and the country’s prosperity in a way that allows them to exercise their strengths, particularly in an international context.

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  • UBS Plans to Up Pay for Junior Bankers and Directors

    UBS Plans to Up Pay for Junior Bankers and Directors

    UBS Group is reportedly planning to raise the salaries of global banking analysts, associates, and directors, marking the latest global bank to increase pay for talent.

    In their first year, analysts will earn about $100,000 annually, according to a «Reuters» report citing unnamed sources, followed by $105,000 in the second year and $110,000 in the third year.

    Associates will earn $175,000 to $225,000 and directors will make around $275,000.

    The salaries increases will come into effect from August 1, the report added.

    UBS is the latest global bank to increase salaries in order to attract and retain talent, particularly for non-senior positions.

    This follows similar moves by Wall Street banks to incentivize younger financial workers, particularly after first-year analysts at Goldman Sachs complained about a gruesome work-life of long hours and cutthroat deadlines in an internal survey leaked earlier this year.

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  • UBS Reports Strong Second Quarter Performance

    UBS Reports Strong Second Quarter Performance

    Swiss bank UBS reports second-quarter 2021 net profit attributable to shareholders of $2 billion, up 66 percent from a year earlier.

    Operating Income was up 21 percent while expenses rose 10 percent, helping the cost/income ratio to fall 4.1 percentage points year-on-year. The bank saw continued momentum in investment flows and volume growth in conjunction with favorable market conditions and investor sentiment, according to a media release on Tuesday.

    Invested assets in Global Wealth Management (GWM) and Asset Management rose 4.4 percent from the first quarter to $4.4 trillion, with GWM recorded $25 billion in net new fee-generating assets. The group reported $0.55 diluted earnings per share and a 14.5 percent CET1 ratio.

    UBS chief executive Ralph Hamers provided commented: «Momentum is on our side and our strategic choices and initiatives are paying off. And we are eager to make the most of our future.

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  • Big Gap Opens Up Between UBS, Credit Suisse

    Big Gap Opens Up Between UBS, Credit Suisse

    A big gap has opened up not only between UBS and Credit Suisse’s share prices but also between expectations for their second-quarter earnings.

    Ahead of the publication of their second-quarter results there really is no comparison. Looking at the share prices of the two big Swiss banks, UBS, whose results are due out on Tuesday, has risen just under 10 percent since the beginning of the year; and the bank is by no means one of the star performers on the Swiss stock exchange.

    However, you would have to look long and hard to find a worse performer than Credit Suisse, whose results are set to be published on July 29. Its shares have dropped 27 percent over the same period.

    Credit Suisse was in a world of pain in the second quarter. There is a great deal of uncertainty about its medium-term future after it lost billions in the collapse of Archegos Capital and no end in sight to the flood of employees heading for the exit at its investment bank. The lack of clarity about its prospects of recouping all the money from the Greensill funds is a source of disaffection to both staff and those asset management and private banking clients affected.

    Its battered reputation makes if difficult for Credit Suisse to acquire new clients and funds. The investigations into the Greensill and Archegos debacles by and the instruction from Swiss financial watchdog Finma only to do low-risk business are complicating its operations.

    Compared with UBS and the competition across the Atlantic, Credit Suisse is wrestling with both new and legacy problems at the worst possible moment.

    Credit Suisse is in danger of sliding into a completely different league to UBS. This is despite 800 million Swiss francs ($873 million) of UBS’ money going down the drain when Archegos collapsed.

    As far as banks with which Credit Suisse likes to compare itself such as Goldman Sachs or J.P. Morgan go, this has already happened.

    Last week, Goldman Sachs reported a second-quarter profit of $5.5 billion, J.P. Morgan made almost $12 billion. This was down to a U.S. economy going full steam ahead, strong results from their investment banks as well as mergers and acquisitions activity.

    The second-quarter forecasts for Credit Suisse are a tiny fraction of that.

    The consensus estimate is for a pre-tax profit of just over 840 million francs and a net profit of just over 330 million francs. The one-off effect of a further loss of 600 million francs due to Archegos is expected to weigh on the second-quarter numbers.

    Credit Suisse was still a money-making machine in the first quarter – apart from the debacles which cost billions – especially the investment bank, but the forecasts for the second quarter are very different indeed. Analysts are predicting revenues of around 1.75 billion francs offset by expenses of around 1.7 billion francs. The investment bank is expected to post a loss in the second quarter.

    Expectations for the wealth management business and client acquisition are also very subdued. A cash outflow is expected in Asset Management and an increase of around 3 billion francs across all units.

    The expectations for UBS are nothing to write home about but much better. The consensus forecast is for a second-quarter profit of just over $1.3 billion, significantly less than in the first quarter but still higher year on year.

    In its core business of Global Wealth Management, significantly less volatile markets hit client activity. Revenues will be significantly lower than in the first quarter. The focus will therefore be on implementing the cost-cutting program. The aim is to save $1 billion by 2023. However, there are likely to have been restructuring costs of around $300 million in the second quarter.

    The big gap between UBS and Credit Suisse not only lies in their share prices and results but also in the base from which they are starting, which has changed yet again since the spring.

    While UBS is pursuing a strategy for the future under its new CEO Ralph Hamers and has the means and capacity to invest in a technological transformation, Credit Suisse is dealing with its past. It has to resolve legacy issues that affect its corporate culture and, more specifically, the shortcomings in risk management.

    New Chairman António Horta-Osório has made it clear that this will take time and that no decisions on changes to the bank’s strategy are expected before the end of the year. In other words, UBS is building its future, something Credit Suisse can only dream of.

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  • UBS Rolls Out Permanent Hybrid Working Option

    UBS Rolls Out Permanent Hybrid Working Option

    UBS will allow up to two-thirds of its staff to permanently split working hours between home and the office, in hopes that the approach could help outdo U.S. rivals in requirement.

    An internal analysis of the 72,000-strong global workforce identified that around two-thirds had roles that were fit for hybrid working, according to a report citing unnamed sources, equivalent to more than 48,000 employees.

    The arrangements will be based on an individual’s role, tasks, and location with some, such as traders and branch staff, offered little flexibility with requirements to work on site. For certain activities, even hybrid workers will be required to come into the office to attend.

    No date has been set for a return to the office, according to the plan which is being led by chief executive Ralph Hamers.

    UBS’commitment to more hybrid working contrasts with that of major U.S. rivals which are not only increasingly asking workers to return but also demonstrating relatively critical views about the state of affairs.

    If you can go to a restaurant in New York City, you can come into the office and we want you in the office, Morgan Stanley CEO James Gorman said at a recent conference.

    Last year, UBS even explored the potential to have traders operate outside of the office, experimenting with virtual reality headsets for its London-based staff.

  • UBS Issues First Green Bonds

    UBS Issues First Green Bonds

    UBS has issued its first green bonds which it will use to finance mortgages for low-energy buildings.

    Major Swiss bank UBS Tuesday issued its first «green bonds»

    They are in two tranches, one of 500 million euros ($595 million) with a five-year maturity and a seven-year one of 250 million francs ($272 million), the bank said in a press release.

    UBS said the bonds were issued under its Green Funding Framework which is based on international rules. The framework defines green investments in the form of mortgages on Swiss buildings which meet the Minergie standard for low-energy buildings. The bank intends to expand the pool of suitable assets continually.

    The bonds will help UBS kill several birds with one stone. It will be keeping its promise to achieve net-zero greenhouse gas emissions across its entire business by 2050 as well as helping its clients with sustainability.

    The «green bonds» will also bolster its balance sheet by helping refinance its mortgage book on a broader basis.

    Environmental Balance Sheet

    They will also help its environmental balance sheet. A recent study showed 35 percent, or $13.4 billion, of UBS’ loans book’s exposure to what the bank terms climate-sensitive industries was in real estate.

    Reducing high-carbon positions on the balance sheet is more important than simply cutting exposure to climate-sensitive sectors such as real estate. We don’t serve the community better by reducing real estate lending, rather, by making real estate lending greener.

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  • Technology Banker Returns to UBS

    Technology Banker Returns to UBS

    Swiss bank UBS enticed a key technology banker back, after a six-month stint at Wells Fargo.

    UBS is hiring Paul McEwen as its head of technology services. McEwen had previously overseen the Swiss bank’s cloud services before leaving six months ago for Wells Fargo, which hired him as head of the infrastructure.

    He will be back at UBS next month, the newswire reported, and report to Mike Dargan, who was recently elevated into UBS’ top management.

    Dargan now oversees technology as well as UBS’s group corporate services. CEO Ralph Hamers has called the new job crucial in differentiating UBS.

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  • UBS Remains in Race for Dutch Asset Manager

    UBS Remains in Race for Dutch Asset Manager

    The Swiss bank is among the suitors remaining for Dutch asset manager NN. The competition for NN is strong – but UBS may have an ace up its sleeve.

    The sale of Dutch money manager NN is entering the next round with UBS, DWS, Prudential, and U.S.-based Nuveen submitting bids. None of the reported suitors nor the target commented.

    The potential acquirers are in the midst of due diligence, according to the newswire, though the deadline to place bids for the 300 million euro ($363 million) asset manager is July 1. The other firms which had expressed interest in buying – including Allianz, Generali, and The Royal London Group – have retreated.

    NN aims to take in as much as 1.6 billion euros by selling. UBS has somewhat of an inside track on NN because ING spun it off in 2014 – under then-CEO Ralph Hamers, who moved to the UBS top job last November.

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  • Ex-J.P. Morgan Exec Joins UBS Private Markets Unit

    Ex-J.P. Morgan Exec Joins UBS Private Markets Unit

    UBS Global Wealth Management has hired a former J.P. Morgan executive to join its direct investment group.

    Edith Chan joins UBS Global Wealth Management as its Greater China head of direct investment group distribution, according to an internal memo effective June 21. A spokesperson for the bank confirmed the hire.

    Chan rejoins the Swiss bank after previously serving in a similar role as its Greater China head of private markets distribution. She was most recently with J.P. Morgan where she also focused on private markets between 2018 and 2020. She previously worked with various private banks and asset managers including HSBC Private Bank and Deutsche Bank.

    UBS’ direct investment group focuses on investing in private companies via direct participation in primary and secondary equity share placements.

    It is also active in private debt and credit placements as well as real estate and infrastructure funds.

    UBS sources such deals globally from its investment bank, asset manager, and network of blue-chip financial sponsors.

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  • Ex-J.P. Morgan Exec Joins UBS Private Markets Unit

    Ex-J.P. Morgan Exec Joins UBS Private Markets Unit

    UBS Global Wealth Management has hired a former J.P. Morgan executive to join its direct investment group.

    Edith Chan joins UBS Global Wealth Management as its Greater China head of direct investment group distribution, according to an internal memo, effective June 21.

    A spokesperson for the bank confirmed the hire.

    Chan rejoins the Swiss bank after previously serving in a similar role as its Greater China head of private markets distribution. She was most recently with J.P. Morgan where she also focused on private markets between 2018 and 2020. She previously worked with various private banks and asset managers including HSBC Private Bank and Deutsche Bank.

    UBS’ direct investment group focuses on investing in private companies via direct participation in primary and secondary equity share placements.

    It is also active in private debt and credit placements as well as real estate and infrastructure funds.

    UBS sources such deals globally from its investment bank, asset manager and network of blue-chip financial sponsors.

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  • UBS’ Insourcing Revolution Shakes Cognizant

    UBS’ Insourcing Revolution Shakes Cognizant

    Outsourcing giant Cognizant has had to let dozens of staff in Switzerland go as UBS continues its policy under CEO Ralph Hamers of bringing entire IT departments back in-house. Both the major Swiss banks, UBS and Credit Suisse are long-standing Cognizant customers. UBS used to pay Cognizant up to $330 million a year for IT services and business process outsourcing. Credit Suisse spends around $220 million a year with Cognizant Services, $100 million of it in Switzerland.

    The major IT consultancy and outsourcing companies make immense amounts of money from the financial sector, and U.S.-based Cognizant, one of the sector’s top companies globally, has sales of $5.6 billion to the finance sector, a good third of its total turnover.

    However, the relationship between UBS and Cognizant has been turning frosty in recent years, and in Switzerland there has been a falling out. UBS last year elected not to renew a service contract, with effect from the end of April. This meant that at a stroke Cognizant lost half of its business with UBS – around $60 million worth.

    As a result, Cognizant faced making 70 to 80 consultants working for UBS redundant. The company had had up to 200 staff under contract to UBS. The bank took on around a third of them and another third were taken on by other IT services companies such as Epam and Infosys.

    Neither Cognizant nor UBS would comment on the termination of the contract.

    Two separate said there were two reasons for UBS dropping Cognizant. In May 2020 the U.S. company was the victim of a ransomware attack that wrecked its efforts to provide IT services from home offices.

    UBS then canceled its global contract for several years of IT services early, with effect from the end of April this year, on security concerns. The second reason is UBS’s tendency over the last few years to take IT services back in-house.

    In 2018, the bank unilaterally canceled its long-standing partnership with Cognizant in India. UBS sold its «India Service Center» with around 200 staff to Cognizant in 2009 and at the same time signed a contract for several years of services, which was first of all not extended and then canceled entirely.

    Competition between outsourcing vendors is extremely fierce and the pressure on prices is enormous. UBS constantly beat Cognizant and other IT service providers down on price.

    Mike Dargan, who became UBS’s chief information officer in 2016, reversed the bank’s strategy of outsourcing. The massive acceleration in innovation and digitalization in the financial sector forced Dargan to the conclusion that IT development and services should be dealt with by in-house departments in order to keep up.

    Chris Gelvin, a UBS veteran who has been head of group operations since 2018 and was in January this year also appointed chief transformation officer, is responsible for implementing this strategy.

    In the meantime, Dargan has risen within the ranks of top management to become COO as well as chief digital and information officer. The step-by-step ending of the vendor contracts and the in-housing strategy are completely in line with Hamers’ thinking.

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  • UBS Director’s Luxury Hong Kong Hideaway

    UBS Director’s Luxury Hong Kong Hideaway

    A board job at the Swiss wealth giant is a lucrative gig, but probably not lead to ultra-high net worth riches. Or at least not rich enough to purchase one of Hong Kong’s priciest manses, as Fred Hu just did.

    Hu plopped down HK$428 million ($55 million) for a 4,755-square foot home on Tai Tam Road in Hong Kong, according to Land Registry Records. This is just shy of an anonymous Chinese buyer who set a record when putting down HK$459 million in February for a home in the territory.

    Hu is a heavyweight who left Goldman Sachs, where he was a partner and oversaw the U.S. investment bank’s activities in China, to launch his own private equity firm, Primavera, in 2010. Primavera has $2.9 billion in assets under management, according to «Bloomberg».

    In 2018, Swiss wealth manager UBS snagged Hu as a director, where he is part of succession planning as a member of a governance and nominations committee, as well as part of risk oversight.

    Hu also sits on the boards of Ant Group, Hong Kong’s stock exchange, and ICBC, a Chinese lender which is the world’s largest by assets. A fund managed by Hu’s Primavera was spotlighted last year for allegedly selling heavily discounted Ant Group shares to Hu’s siblings – underscoring the perils of rapid wealth growth in Asia.

    As for Hu’s pay at UBS: he takes home 600,000 Swiss francs ($670,000) annually, 50 percent of which is in shares of the Swiss bank.