Swiss bank UBS raked in US$28 billion from wealthy clients before takeover of troubled rival Credit Suisse

Name: Thousands of jobs at risk after UBS’ US$3.2 billion takeover of Credit Suisse
Uploaded: 2023-04-25T06:32:26.000Z
Duration: 2 min 30 s
Description: Thousands of jobs at risk after UBS’ US$3.2 billion takeover of Credit Suisse

The net new money included US$7 billion that came in the 10 days after the takeover of its smaller rival was announced

The inflows were a bright spot in a first quarter that saw UBS miss estimates for profit as it set aside US$665 million for litigation

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The Swiss banks UBS and Credit Suisse on the Paradeplatz in Zurich, Switzerland. Photo: Reuters

Bloomberg

Published: 2:32pm, 25 Apr 2023

UBS Group attracted US$28 billion from wealthy clients in the months running up to its takeover of Credit Suisse Group, in an early indication of how many assets the combined firms will be able to retain.

The net new money at the firm’s global wealth management business included US$7 billion that came in the 10 days after the takeover of its smaller rival was announced. That contrasts with outflows of about US$69 billion at Credit Suisse in the first quarter.

The inflows were a bright spot in a first quarter that saw UBS miss estimates for profit as it set aside US$665 million for litigation tied to its role in selling mortgage securities before the financial crisis. The firm also warned that geopolitical tensions and recent liquidity concerns in the banking industry are depressing client activity and could affect new money in the months to come.

Retaining clients and assets is a key challenge for Sergio Ermotti, who was brought back as UBS chief executive officer as the firm embarks on an extensive restructuring following its rescue of the smaller rival in late March. Credit Suisse revealed on Monday that it borrowed far more from a central bank liquidity backstop than previously known, with clients continuing to flee after the deal was announced.

“We are taking another transformational step in UBS’s journey, while remaining committed to our culture, strategy and disciplined risk management,” Ermotti said in the statement. “With this transaction, we expect to reinforce our position as a leading and truly global wealth manager.”

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Thousands of jobs at risk after UBS’ US$3.2 billion takeover of Credit Suisse

UBS has been a major beneficiary of Credit Suisse’s troubles, with wealthy clients adding US$23.3 billion of net new fee-generating assets already in the fourth quarter. It is now paying about US$3 billion for a firm that finished March with a book value of 54 billion francs (US$60.9 billion), giving it plenty of protection against losses.