Capital Rules Embolden UBS To Eye Acquisitions - Report

Tom Burroughes

19 March 2018

UBS intends to acquire wealth management businesses more aggressively after it has a clearer idea of how much capital global regulators say it needs, according to a Bloomberg report late last week that quoted unnamed sources.

While rivals such as Zurich-listed Julius Baer has been quite active on the M&A front in recent years, most significantly with its purchase over half a decade ago of the Merrill Lynch international wealth arm, UBS has not been particularly busy in this regard, preferring to re-cast its business and grow organically. UBS, which received state bailout funds in the 2008, has bounced back strongly and is the world’s largest wealth firm, with SFr2.3 trillion in AuM across all areas as at the end of last year. It has seen recoveries in all regions, with particular growth in regions such as Asia.

UBS announced earlier this year it was putting all its wealth management businesses into a single organizational structure.

Sources told the newswire that UBS wants to buy targets with portfolios of at least SFr10 billion. The geographic location of such targets wasn’t disclosed in the article.

If such a deal were to occur, it might validate the prediction made to this publication by an industry expert on wealth sector M&A that at least one major firm could disappear because of the pressures to consolidate amid tight margins.

The newswire story said that UBS chief executive Sergio Ermotti intends to return up to SFr2 billion to shareholders in its first buybacks in a decade after the Basel IV rules on capital were announced in December last year. The recent acquisition of Nordea’s private banking business in Luxembourg fits the mould of future deals the bank plans to pursue, one of the people said.

The bank declined to comment, the report said.

Smaller deals made by UBS have included its decision to buy a majority stake in Consenso Investimentos, the Brazil-based multi-family office with around $6 billion in assets under management, in May.