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  • UBS Can Use Repurchased Shares to Fund Credit Suisse Takeover

    UBS Can Use Repurchased Shares to Fund Credit Suisse Takeover

    Instead of raising new capital to fund its takeover of Credit Suisse by issuing new shares, UBS will repurpose some of those it obtained as part of a repurchase program.

    In March of last year, UBS launched a $6 billion stock buyback program, scheduled to run until the end of March of next year as part of a capital reduction, which has now been amended, according to a statement Tuesday.

    To fund its government-imposed take over on March 19 of rival Credit Suisse for three billion Swiss francs, and avoid raising new capital, UBS sought changes to the terms of the buyback. Instead of canceling the repurchased shares, they will be used to complete the takeover.

    A maximum of just over 178 million «UBS Merger Shares» will be required for the transaction, where one share will be exchanged for 22.48 shares of Credit Suisse. To date, UBS bought back 298.5 million shares through the program, corresponding to 8.5 percent of those registered,

    In the interest of the shareholders of UBS, the board of directors of UBS has decided not to implement a capital increase. Instead, already issued own shares of UBS shall be used for the completion of the Merger, according to the statement.

    As of April 14, UBS owned either directly or indirectly 473.2 million of its registered shares or 13.4 percent of voting rights. Black Rock is UBS’s largest shareholder at just under five percent. Artisan Partners, Dodge & Cox in the US, and Norway’s Norges Bank each own just over three percent.

    UBS said it does not know its intentions concerning the sale of shares as part of the buyback program.

    On April 2, UBS requested permission from the Swiss Takeover Board to approve the amended repurchase program and received it on April 12.

  • UBS to take over Credit Suisse, assume up to 5B Swiss francs in losses

    UBS to take over Credit Suisse, assume up to 5B Swiss francs in losses

    UBS agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.

    The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank.

    The government said that to enable UBS to take over Credit Suisse, the federal government is providing a loss guarantee of a maximum of 9 billion Swiss francs for a clearly defined part of the portfolio.

    This will be activated if losses are actually incurred on this portfolio. In that eventuality, UBS would assume the first 5 billion francs, the federal government the next 9 billion francs, and UBS would assume any further losses, the government said.

    Switzerland’s regulator FINMA said that there was a risk that Credit Suisse could have become “illiquid, even if it remained solvent, and the authorities needed to take action”.

    Credit Suisse Additional Tier 1 shares with a nominal value of around 16 billion francs ($17.2 billion) will be written down completely after the Swiss government provided support for UBS’ takeover of Credit Suisse, FINMA said.

    The 167-year-old Credit Suisse has been the biggest name ensnared in market turmoil unleashed by the recent collapse of U.S. lenders Silicon Valley Bank and Signature Bank, forcing it to tap $54 billion in central bank funding last week.

    “With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss central bank said.

    Authorities had been scrambling to rescue Credit Suisse, among the world’s largest wealth managers, before financial markets reopened on Monday.

    UBS and Credit Suisse are both in a group of the 30 global systemically important banks watched closely by regulators, and Credit Suisse’s failure would ripple throughout the entire financial system.

    The announcement came in a make-or-break weekend after some rivals grew cautious in their dealings with the struggling Swiss lender, and its regulators urged it to pursue a deal with UBS.

    FINMA, which said it had approved the takeover, said recent measures to stabilize itself were “not enough to restore confidence in the bank, however, and more far-reaching options were also examined.”

    The two banks’ fortunes have diverged sharply over the past year. UBS earned $7.6 billion in profit in 2022, while Credit Suisse lost $7.9 billion. Credit Suisse’s shares are down 74% from a year ago, while UBS’s are relatively flat.

    The Swiss government said that it was also giving UBS a guarantee of 9 billion Swiss francs “assume potential losses” from assets as part of the transaction.

    UBS’s chief executive officer Ralph Hamers and Chairman Colm Kelleher will remain at the helm of the combined bank.

    “The transaction reinforces UBS’s position as the leading universal bank in Switzerland,” UBS said.

    Executives foreshadowed structural changes in the offing.

    Kelleher said it would wrap up running Credit Suisse’s investment bank, but added that it was too early to say anything about potential job cuts.

    Kelleher also said they would keep Credit Suisse’s domestic business, despite speculation that it could be spun off amid competition concerns.

    Credit Suisse’s Chairman Axel Lehmann called the merger the “best available outcome”.

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  • Korea’s Financial Regulator Hits UBS With Hefty Fine

    Korea’s Financial Regulator Hits UBS With Hefty Fine

    Korea’s financial regulator has fined the Seoul branch of UBS AG (in Zurich) for allegedly violating short-selling rules. Other financial firms are under investigation.

    UBS Securities and ESK Asset Management were fined a total of 6 billion won ($4.5 million) by Korea’s financial regulator in what it said was a violation of local short-selling rules.

    It marks the first time financial authorities imposed penalties on financial firms for breaching rules since the country’s capital market law was revised in April 2021 to tighten short-selling regulations.

    The statement added that financial regulators are currently investigating ten other domestic and foreign financial firms for similar violations.

    The report, citing industry sources, said the Securities and Futures Commission (SFC), a top financial regulator decision-making body, decided last Wednesday to fine UBS Securities 2.18 billion won and ESK 3.87 billion won for illegal short-selling practices.

    UBS’s Seoul branch allegedly placed sell orders for shares of a local company worth 7.3 billion won in 2021 without owning the shares. Normally, traders must borrow shares before they can sell them short.

    An official from the Financial Supervisory Authority said the decision was made after several in-depth discussions on the appropriate level of sanctions.

  • UBS Invests in Incubator Fund

    UBS Invests in Incubator Fund

    Switzerland’s fintech and insurtech ecosystem is getting a boost by partnering with the country’s largest bank.

    Startup incubator and accelerator Tenity (formerly known as F10) and UBS are entering a strategic partnership, according to an emailed statement on behalf of the two parties Thursday.

    Tenity is a startup incubator with an investment arm that invests in technology companies in the financial and insurance industries. It focuses on early-stage companies in several countries.

    UBS’s strategic venture and innovation unit, UBS Next, which already invests in fintechs directly, will also invest in the Tenity Incubation Fund, the statement adds.

    The partnership with Tenity allows us to expand our fintech network and align innovative ideas and solutions at an early stage, specifically tailored to the needs of our clients in Switzerland, President UBS Switzerland Sabine Keller-Busse, said.

    Having UBS as a strategic partner will help our current and future portfolio companies bring even more innovation to this important industry, Andreas Iten, CEO and co-founder Tenity said.

    More than 250 companies have participated in Tenity programs so far. The new fund will seek to invest in up to 400 new companies.

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  • UBS Invests in Incubator Fund

    UBS Invests in Incubator Fund

    Switzerland’s fintech and insurtech ecosystem is getting a boost by partnering with the country’s largest bank.

    Startup incubator and accelerator Tenity (formerly known as F10) and UBS are entering a strategic partnership, according to an emailed statement on behalf the two parties, Thursday.

    Tenity is a startup incubator with an investment arm that invests in technology companies in the financial and insurance industries. It focuses on early-stage companies in several countries.

    UBS’s strategic venture and innovation unit, UBS Next, which already invests in fintechs directly, will also invest in the Tenity Incubation Fund, the statement adds.

    The partnership with Tenity allows us to expand our fintech network and align innovative ideas and solutions at an early stage, specifically tailored to the needs of our clients in Switzerland, President UBS Switzerland Sabine Keller-Busse, said.

    Having UBS as a strategic partner will help our current and future portfolio companies bring even more innovation to this critical industry, Andreas Iten, CEO, and co-founder Tenity said.

    More than 250 companies have participated in Tenity programs so far. The new fund will seek to invest in up to 400 new companies.

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  • UBS Loses Appeal to Halt London Lawsuit

    UBS Loses Appeal to Halt London Lawsuit

    UBS has lost an appeal to throw out a lawsuit by an exiled Chinese businessman over an allegedly forced share sale by the Swiss bank’s London branch.

    A London court of appeal has dismissed UBS’s latest attempt to throw out a $500 million lawsuit by exiled Chinese businessman Guo Wengui and his firm Ace Decade.

    According to Guo, he and Ace Decade allegedly lost $500 million after UBS forced a sale of an indirect equity investment in Chinese brokerage Haitong Securities during a market downturn in July 2015.

    Last month, UBS argued in the appeal court that the lawsuit would only be valid in Switzerland despite involvement by the London branch. This argument was previously rejected by a lower court in 2022.

    The claims undoubtedly arose out of UBS London’s operations. UBS London significantly participated in the events that have given rise both to the claim and the los ns claimed.

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  • Whatsapp Hunters Seeking New Financial Sector Game

    Whatsapp Hunters Seeking New Financial Sector Game

    After imposing fines on large banks UBS and Credit Suisse for using unsecured communication channels, the US Securities and Exchange Commission is now aiming for another industry.

    Now, US fund behemoths Blackstone and Blackrock are in the sights of the US Securities and Exchange Commission (SEC), which announced months ago it wanted to investigate other financial firms after taking on the banks.

    The company said Blackstone was contacted by the SEC back in October to release information about its retention of electronic business communications and text messages. Blackrock reported that it would respond to a Securities and Exchange Commission request concerning an industry-wide investigation. Both companies said they would cooperate with regulators.

    Earlier, financial investors Apollo Global Management, Carlyle Group, and KKR reported a request from the agency to do so.

    Last year, after months of investigation, the SEC fined a total of 16 financial firms, including Wall Street titans Goldman Sachs, Bank of America, Citigroup, Morgan Stanley, and JP Morgan. Credit Suisse and UBS also had to pay $200 million each.

    The fines resulted in the banks imposing stricter controls on private phone use.

    JP Morgan recently took a new approach to ensure compliance rules were followed in employee communications, phasing out the company smartphone in the process.

    According to a media report, it is relying on a company smartphone app to ensure communications are compliant. Bankers and traders have been asked to hand over their company cell phones and install a monitoring app on their private devices instead that allows monitoring of work-related messages.

    Swiss banks have precise regulations on which channels and in what form professional communication is allowed and what the documentation requirements are. At UBS, there are clear guidelines of which employees are regularly reminded

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  • UBS is Applying For a Fund License in China

    UBS is Applying For a Fund License in China

    As China gradually opens its financial markets to Western institutions, UBS wants to expand its stake in a joint venture there.

    Swiss bank UBS is in informal talks with China’s securities regulator. The firm wants to apply for a license to sell mutual funds as soon as possible. UBS became the first foreign bank in China to seek a majority stake in its local investment banking unit after regulators lifted limits in 2018, relaxing the rules further in 2019.

    That opened the door for other institutions to follow suit, including  Blackrock, Goldman Sachs, and JP Morgan Chase, which have since obtained various licenses from Chinese regulators to expand their businesses in the Middle Kingdom.

    UBS has a 49 percent stake in a joint venture with state-owned SDIC Taikang Trust and has been in talks with its Chinese partner to take control of the company. However, the two parties failed to reach an agreement according to people familiar with the matter.

    In the past, UBS has held talks with insurer China Life Insurance and the Industrial & Commercial Bank of China, about setting up joint ventures in wealth management. The negotiations failed to reach an agreement and ICBC eventually set up an asset management joint venture with Goldman Sachs.

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  • UBS To Increase Dividend and Buy Back Shares

    UBS To Increase Dividend and Buy Back Shares

    Switzerland’s largest bank managed to improve on its results from last year. The bank will increase its dividend this year and buy back more shares.

    For the year, UBS managed to improve its net profit attributable to shareholders to $7.630 billion from $7.457 billion in 2021, as operating expenses decreased from a year ago, according to figures released Tuesday.

    Operating expenses fell to $24.930 billion from $26.058 billion in 2021, resulting in an increased operating profit of $9.604 billion.

    The fourth quarter results came in better than expected, with net profit attributable to shareholders of $1.653 billion rising from $1.348 billion in the fourth quarter of 2021.

    Total revenues in the fourth quarter were $8.089 billion while operating expenses fell to $6.085 billion, down 13 percent from a year ago. UBS said that the fourth quarter of last year included $740 million in litigation provisions for a cross-border legal case with France.

    Excluding the provisions, operating expenses would have decreased by three percent and pre-tax profit would have declined 22 percent, according to UBS.

    The Global Wealth Management (GWM) unit booked a pre-tax profit of $1.058 billion in the fourth quarter, which was marginally better than expected. Compared to the year-ago result of $563 million, it marked an 88 percent increase. For 2022, the net profit for the unit fell to $4.601 billion, a decline of five percent.

    GWM attracted $23.3 billion in new fee-generating assets for the quarter, bringing the total new money for the year to $60.1 billion, according to UBS.

    CEO Ralph Hamers said, «we could achieve this in a year marked by difficult macroeconomic conditions, persistent inflation, rapid monetary tightening, the war between Russia and Ukraine, the impact of the Corona pandemic in China, and other geopolitical tensions.»

    The Asset Management division reported a pre-tax profit of $124 million for the fourth quarter a decline of 63 percent.

    Hamers also said that UBS is starting 2023 from a position of strength despite uncertain macroeconomic conditions.

    After buying back $5.6 billion of shares last year, Hamers said UBS plans to buy back more than $5 billion this year as well. Furthermore, the bank will continue to pursue a progressive dividend payment policy. For 2023, UBS intends to propose a dividend of $0.55 – 10 percent higher than a year ago.

    UBS will continue to pursue growth opportunities in the United States, Hamers said. In the Americas region, the GWM unit attracted $17 billion in fee-generating money and closed the quarter with strong advisor recruiting efforts.

    UBS said that it continues to see «positive momentum» in private markets in the region, attracting $10 billion of new commitments. Its separately managed accounts (SMA) product contributed $21 billion of new money in the Americas.

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  • UBS To Increase Dividend and Repurchase More Shares

    UBS To Increase Dividend and Repurchase More Shares

    Switzerland’s largest bank posted a better-than-expected profit in the fourth quarter. The bank will also increase its dividend this year and buy back more shares.

    UBS posted a net profit attributable to shareholders in the fourth quarter of $1.653 billion, and $7.630 billion for the year as a whole, according to figures released Tuesday. The fourth quarter result is better than expected, and the annual result improves on the bank’s $7.457 billion net profit in 2021.

    Total revenues in the fourth quarter were $8.089 billion while operating expenses fell to $6.085 billion, down 13 percent from a year ago. UBS said that the fourth quarter of last year included $740 million in litigation provisions for a cross-border legal case with France.

    Excluding the provisions, operating expenses would have decreased by three percent and pre-tax profit would have declined 22 percent, according to UBS.

    The Global Wealth Management (GWM) unit booked a pre-tax profit of $1.058 billion in the fourth quarter, which was marginally better than expected. Compared to the year-ago result of $563 million, it marked an 88 percent increase. For 2022, the net profit for the unit fell to $4.601 billion, a decline of five percent.

    GWM attracted $23.3 billion in new fee-generating assets for the quarter, bringing the total new money for the year to $60.1 billion, according to UBS.

    CEO Ralph Hamers said, «we could achieve this in a year marked by difficult macroeconomic conditions, persistent inflation, rapid monetary tightening, the war between Russia and Ukraine, the impact of the Corona pandemic in China, and other geopolitical tensions.»

    The Asset Management division reported a pre-tax profit of $124 million for the fourth quarter a decline of 63 percent.

    Hamers also said that UBS is starting 2023 from a position of strength despite uncertain macroeconomic conditions.

    After buying back $5.6 billion of shares last year, Hamers said UBS plans to buy back more than $5 billion this year as well. Furthermore, the bank will continue to pursue a progressive dividend payment policy. For 2023, UBS intends to propose a dividend of $0.55.

    UBS will continue to pursue growth opportunities in the United States, Hamers said. In the Americas region, the GWM unit attracted $17 billion in fee-generating money and closed the quarter with strong advisor recruiting efforts.

    UBS said that it continues to see «positive momentum» in private markets in the region, attracting $10 billion of new commitments. Its separately managed accounts (SMA) product contributed $21 billion of new money in the Americas.

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  • UBS Set to Poach Staff for M&A

    UBS Set to Poach Staff for M&A

    During this week’s Davos conference CEO Ralph Hamers, said UBS was looking to hire. Now we know which kind of bankers it is going after.

    UBS is looking to bolster its M&A staff, citing people familiar with the plans.

    The move contrasts with recent decisions by banks, including Morgan Stanley and Goldman Sachs, to cut staff and reduce investment banking capabilities after last year’s dealmaking slump.

    UBS focuses on experienced managing directors at target boutique advisory businesses, which it aims to lure with attractive compensation.

    Since the financial crisis Boutique M&A advisory groups such as PJT Partners, Houlihan Lokey, Evercore, Lazard, Greenhill and Robey Warshaw — have been winning market share from traditional bulge bracket investment banks, it added.

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  • Power Struggle Brewing at UBS

    Power Struggle Brewing at UBS

    A recent UBS leadership appointment at the very top of the bank continues to provoke internal resentment.

    There is likely a tug-of-war going on at Switzerland’s largest bank. The ostensible trigger is the current group chief financial officer Sarah Youngwood. She has been under criticism for a while now and questions are increasingly circulating about her competence.

    That fact weighs even more heavily now after it has become common knowledge inside UBS that her application had been rejected by the board of directors several times. When asked, a spokesperson for the bank said: That claim is entirely false.

    According to internal sources, it appears that the US-French dual citizen Youngwood got the top job in the finance department because of the backing of CEO Ralph Hamers.

    Apparently, he managed to push through his external candidate given the strength of his position to the dissatisfaction of a number of board members and even some top executives. A UBS spokesperson refuted the claims and indicated: «These rumors have no basis in fact.

    There continues to be resentment at the highest levels of UBS to this day given Youngwood’s appointment in May 2022. At the same time, Hamers finds himself in an increasingly precarious position, even if UBS officially continues to deny this. From the point of view of certain top executives, doubts have arisen about Hamers related to all this.

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  • UBS Recruits Impact Investing Executive

    UBS Recruits Impact Investing Executive

    The funds unit of UBS has appointed a head of impact investments for the first time, as finews.com has learned. The experienced executive will be working from the Netherlands.

    UBS is appointing Narina Mnatsakanian as head of Impact Investing, according to a memo seen by finews.com, effective immediately. In the newly created role Mnatsakanian will lead the expansion of UBS Asset Management’s impact investing offering, research and impact measurement capabilities.

    Mnatsakanian joins Lucy Thomas’ team who has was appointed head of sustainability at UBS Asset Management just over a year ago.

    Thomas described the development of the impact area, where the focus is on the actual sustainable impact of investments, as a strategic priority.

    The new appointee previously headed sustainability & impact investment at independent Dutch asset manager Van Lanschot Kempen. Before Kempen, Mnatsakanian worked at private equity funds and as an asset manager for Dutch pension funds. She also led the global networks & outreach department at the UN Principles for Responsible Investment network.

    Mnatsakanian becomes a member of sustainable investing’s leadership team and is based in Amsterdam, the Netherlands, it added.

    UBS reorganized its sustainability offering in mid-2021, appointing Michael Baldinger as the bank’s chief sustainability officer. He has the coordinator role, while the individual initiatives are based in the bank’s divisions. Suni Harford, the head of asset management, acts as a sponsor for sustainability and impact concerns on the UBS group executive board.

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  • UBS Picked as Chinese New Year Festival Partner

    UBS Picked as Chinese New Year Festival Partner

    Swiss banking giant UBS has been chosen as the lead partner for Hong Kong’s first public Chinese New Year celebration since the start of the pandemic.

    According to a statement, UBS is the lead partner for the Wheel of Good Fortune – a Chinese New Year festival located at the business district’s iconic Hong Kong Observation Wheel.

    This marks Hong Kong’s first public Chinese New Year celebration in three years which will feature rides, games and various decorations thematically based on the year of the rabbit.

    The event’s opening ceremony featured UBS’s co-head wealth management APAC Amy Lo, APAC head of investment bank Taichi Takahashi and Joseph Chan, Hong Kong’s under secretary for financial services and the treasury.

    UBS has expressed repeated optimism for China’s reopening as of late from multiple perspectives, including for investments and business opportunities.

    With Hong Kong relaxing the restrictions around Covid, we are confident that the city will be going into a period go growth as we return to more normal business routines, Lo said.

    This week is a special week, marking the progressive, orderly and comprehensive resumption of normal travel between Hong Kong and the mainland, Chan added. Such resumption will support cross-boundary flow of people and goods which will provide great impetus for Hong Kon’s economy.

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  • Capital Group Teams Up With UBS

    Capital Group Teams Up With UBS

    Capital Group sees new investment opportunities in fixed-income bonds and is entering into a partnership with the asset management division of UBS to that end.

    Fund manager Capital Group is entering into a partnership with the asset management division of UBS. According to a statement Tuesday, the investment firm has launched the Capital Group multi-sector income fund (MSI) through an exclusive distribution partnership with UBS Global Wealth Management (GWM) for investors in Europe and Asia.

    MSI combines four fixed-income sectors: investment-grade and high-yield corporate bonds, emerging market bonds, and securitized credit into a single portfolio.

    The Luxembourg-domiciled fund is based on and managed by the same investment team as the US-based MSI strategy launched in 2019. In line with Capital Group’s investment approach, MSI is managed by five portfolio managers with an average investment experience of 23 years.

    According to Mike Gitlin, head of fixed income at Capital Group, the partnership will make Capital Group’s fixed-income business available to UBS investors globally.

    Capital Group is one of the world’s largest and most experienced investment firms with active investment strategies, with more than $2.1 trillion in assets under management.

    Founded in Los Angeles in 1931, Capital Group opened its first foreign office in Geneva in 1962 and added a Zurich office in 2015. In Switzerland, the firm employs about 130 people, 11 of them in Zurich, the majority in sales.

    Organized as a partnership, Capital Group is not listed on stock exchanges. Another distinctive feature is the relatively few strategies it offers, around 50, compared to other large asset managers. In addition, around 60 percent of the investments are held for over five years.

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