UBS courts US investment heavyweights to boost valuation
UBS has started courting significant US investment residences to become top shareholders, as the Swiss loan provider makes an attempt to boost its market benefit to be nearer aligned with Wall Street peers.
New chair Colm Kelleher and chief government Ralph Hamers have been keeping a series of meetings with influential US fund professionals in modern months to tempt them to raise their stakes in the lender, in accordance to people today with expertise of the discussions.
The UBS board has grown discouraged that the organization — which is the world’s most important prosperity manager — trades at a price reduction to Wall Avenue financial institutions, which they think is thanks to a damaging notion of European and Swiss loan companies.
Kelleher and Hamers have embarked on a roadshow to persuade US financial commitment heavyweights such as Money Group, T Rowe Price tag, Wellington and Fidelity to ramp up their holdings in the group.
UBS declined to remark on the meetings.
UBS is a person of Europe’s most important banking companies, with a price tag to book ratio — which compares its industry worth with its full property — of 1, compared to .3 for Credit history Suisse, Société Générale and Deutsche Financial institution, .4 for Barclays and .6 for HSBC.
By comparison, Wall Avenue loan providers JPMorgan and Morgan Stanley every single trade at 1.3, although Goldman Sachs and Wells Fargo are both on 1.
Supplied UBS’s enterprise is greatly concentrated on better margin wealth administration relatively than riskier investment banking, the bank’s board thinks it has the likely to have a market capitalisation of 2 times its book price, in accordance to individuals acquainted with their considering. They are trying to convince investors to see it as a global financial institution with Swiss roots, alternatively than a European establishment.
“If we are a European bank with European buyers, we will trade at 1 situations e-book,” mentioned just one of the men and women. “The objective is two situations.”
UBS is a single of Europe’s finest executing banking companies, not the very least since the commencing of the coronavirus pandemic two years ago when governing administration stimulus measures aided boost the assets of its extremely-rich shoppers.
In 2021, the bank enjoyed its most lucrative 12 months considering the fact that before the world-wide economic crisis, with continued sturdy benefits in the first quarter of 2022 as its traders capitalised on risky markets.
Beneath Hamers, who has been at the lender for just beneath two yrs, UBS has targeted on rising its business enterprise in the US, even though it has also made prolonged-time period investments in Asia in expectation that the marketplace will open up up the moment the influence of the pandemic recedes.
So significantly he has manufactured a single acquisition in the US, the $1.4bn offer for mass-affluent robo-adviser Wealthfront. It was the bank’s to start with key offer given that the fiscal crisis and is meant as a statement of intent and a signal that UBS is poised to improve 14 years immediately after its Swiss taxpayer bailout.
In April, Kelleher took above from Axel Weber as chair, obtaining earlier been president of Morgan Stanley, the financial institution that is a leader in the US prosperity sector.
Although numerous US investment professionals hold massive stakes in UBS — such as Dodge & Cox, MFS Financial investment Administrators and Artisan Associates — the lender is hoping the greatest financial commitment teams will match the sizing of their stakes in US loan providers.
Wellington, for illustration, the Boston-headquartered investment group with $1.4tn of property, holds a $5bn stake in JPMorgan, a $2.8bn stake in Morgan Stanley and a $900mn holding in UBS.
Somewhere else, Money Team owns a $13.4bn stake in JPMorgan, a $3.9bn holding in Morgan Stanley, a $2.2bn stake in Wells Fargo and $1.2bn of Citigroup stock. By distinction, the secretive LA-based fund manager with $2.7bn of property less than management owns just $180mn of UBS stock.
UBS was a single of various creditors that Funds lower its stakes in as component of a €7bn promote-off of European bank shares this 12 months. The Money Occasions disclosed last thirty day period that the disposals had been the final result of a one influential portfolio supervisor, Nick Grace, souring on the sector on the back again of the war in Ukraine and the risk of a global recession.
Further reporting by Laura Noonan