During the 1Q, UBS gains US$28B in new assets as Credit Suisse deal is anticipated.

Swiss banking giant UBS announced on Tuesday that it had achieved $28 billion of net new money for its wealth management business in the first quarter, out of which $7 billion was registered in the days following the announcement of its government-backed merger with struggling rival Credit Suisse.

UBS, based in Zurich, is set to become Switzerland’s banking behemoth once the merger is finalized in the coming months. The bank declared that underlying pre-tax profit had declined by 22 percent to $2.35 billion in the first quarter, compared to the same period last year, while underlying revenues recorded an 8 percent fall.

UBS added that it had bought back $1.3 billion worth of its shares in the quarter and reiterated that its share-buyback initiative had been put on hold temporarily pending the completion of the Credit Suisse acquisition, which is worth CHF 3 billion ($3.4 billion).

“In the first quarter, we maintained positive momentum across the firm and attracted $28 billion of net new money in GWM (Global Wealth Management), of which $7 billion came in the last 10 days of March, after the announcement of our acquisition of Credit Suisse,” UBS stated.

The bank stated that it had “capitalized on the demand” for higher yield in the money market and US government securities at a time of rising interest rates, which can increase the return on lower-risk assets like US government bonds.

“We delivered these results during a quarter characterized by persistent concerns about interest rates and economic growth exacerbated by questions about the stability of the banking system, especially in the US,” UBS noted. “Against this backdrop, private and institutional investors’ activity remained muted.”

The net inflows at UBS stood in stark contrast to the $69 billion (CHF 61 billion) in outflows recorded by Credit Suisse for the first quarter of the year. Credit Suisse also declared that its clients were continuing to withdraw their assets.

The planned marriage of Switzerland’s two largest banks, initiated by the country’s executive arm, central bank, and financial markets regulator, was designed in part to help stabilize the global financial system that had been rocked by the failures of two US banks.

The 167-year-old Credit Suisse’s reputation had hit in recent years, thanks to stock price declines, a slew of scandals, and customers fleeing due to concerns about the bank’s future.

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