UBS, a global wealth management leader, has announced impressive net new money inflows in its latest quarter. Additionally, the company is actively working to divest itself of some assets from its recently acquired rival, Credit Suisse.
Strong Performance in Global Wealth Management
UBS's Global Wealth Management unit experienced a significant increase of $22 billion in net new money in the quarter. Notably, this period marks the first time since Q1 2022 that positive inflows have been recorded in the Credit Suisse Wealth Management segment.
According to UBS CFO Todd Tuckner, the company has made great strides in stabilizing the business. This growth is a testament to the successful integration of Credit Suisse, which had previously faced massive outflows.
Winding Down Legacy Assets
In the process of integrating Credit Suisse, UBS is actively winding down certain legacy assets. The company has transferred $5 billion of invested assets from Credit Suisse's wealth management division to its noncore and legacy division, known as NCL. Furthermore, UBS has reclassified $30 billion of Credit Suisse accounts categorized as "related to nonstrategic relationships," leading to a 3% decline in invested assets from the previous quarter.
UBS has refrained from commenting on the specific reasons behind winding down these assets. However, CEO Sergio Ermotti, who has taken charge of managing the integration of Credit Suisse, emphasizes UBS's commitment to conducting a comprehensive investigation into its former rival's holdings. The goal is to establish stronger safeguards for the combined company.
Ermotti expresses optimism about UBS's future, envisioning an even stronger and safer institution. He highlights the vital role UBS played in stabilizing the financial system earlier this year and looks forward to creating a company that all key stakeholders can be proud of.
UBS Continues to Make Strides in Credit Suisse Integration
UBS, one of the largest Swiss banks, is making significant progress in its integration of Credit Suisse. Despite reporting a loss of $785 million for the quarter, UBS gained $33 billion in net new deposits, with $22 billion coming from former Credit Suisse clients.
The bank is also implementing a win-back strategy to regain business from clients who had moved their money to other institutions during Credit Suisse's challenging times. UBS plans to complete the integration of Credit Suisse by the end of 2026 and consolidate the U.S. operations into a single holding company by mid-2024.
While acknowledging the challenges ahead, industry analysts have commended UBS for its efforts in incorporating Credit Suisse. Max Georgiou, an analyst at Third Bridge, emphasized the bank's progress despite the quarterly loss. Vontobel Equity Research analysts also noted UBS's clear progress but highlighted ongoing challenges such as client and staff retention, IT migration, and winding down legacy businesses.
Analysts believe that the U.S. market presents a significant growth opportunity for UBS in its wealth and asset management divisions. European banks, including Credit Suisse, have faced difficulties in scaling their operations in the U.S. Georgiou believes that UBS has stabilized flows from Credit Suisse and now needs to focus on growing its presence in the U.S. market with increased scale.
Overall, UBS's integration of Credit Suisse is on track and positioned to bring long-term growth opportunities. The bank's dedication to capturing former Credit Suisse clients and expanding its presence in the U.S. market underscores its commitment to success.
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