UBS has begun courting giant US funding homes to grow to be high shareholders, because the Swiss lender makes an attempt to enhance its market worth to be nearer aligned with Wall Avenue friends.
New chair Colm Kelleher and chief government Ralph Hamers have been holding a sequence of conferences with influential US fund managers in latest months to tempt them to extend their stakes within the financial institution, in accordance with individuals with information of the discussions.
The UBS board has grown annoyed that the enterprise — which is the world’s greatest wealth supervisor — trades at a reduction to Wall Avenue banks, which they consider is because of a destructive notion of European and Swiss lenders.
Kelleher and Hamers have launched into a roadshow to persuade US funding heavyweights similar to Capital Group, T Rowe Worth, Wellington and Constancy to ramp up their holdings within the group.
UBS declined to touch upon the conferences.
UBS is certainly one of Europe’s most precious banks, with a worth to ebook ratio — which compares its market worth with its complete belongings — of 1, in comparison with 0.3 for Credit score Suisse, Société Générale and Deutsche Financial institution, 0.4 for Barclays and 0.6 for HSBC.
By comparability, Wall Avenue lenders JPMorgan and Morgan Stanley every commerce at 1.3, whereas Goldman Sachs and Wells Fargo are each on 1.
Given UBS’s enterprise is closely targeting larger margin wealth administration quite than riskier funding banking, the financial institution’s board believes it has the potential to have a market capitalisation of twice its ebook worth, in accordance with individuals accustomed to their pondering. They’re attempting to persuade traders to see it as a worldwide financial institution with Swiss roots, quite than a European establishment.
“If we’re a European financial institution with European traders, we’ll commerce at one occasions ebook,” stated one of many individuals. “The objective is 2 occasions.”
UBS is certainly one of Europe’s finest performing banks, not least because the starting of the coronavirus pandemic two years in the past when authorities stimulus measures helped enhance the belongings of its ultra-wealthy shoppers.
In 2021, the financial institution loved its most worthwhile yr since earlier than the worldwide monetary disaster, with continued robust ends in the primary quarter of 2022 as its merchants capitalised on risky markets.
Underneath Hamers, who has been on the financial institution for slightly below two years, UBS has targeted on rising its enterprise within the US, whereas it has additionally made long-term investments in Asia in expectation that the market will open up as soon as the influence of the pandemic recedes.
Up to now he has made one acquisition within the US, the $1.4bn deal for mass-affluent robo-adviser Wealthfront. It was the financial institution’s first main deal because the monetary disaster and is meant as a press release of intent and a sign that UBS is poised to develop 14 years after its Swiss taxpayer bailout.
In April, Kelleher took over from Axel Weber as chair, having beforehand been president of Morgan Stanley, the financial institution that may be a chief within the US wealth market.
Whereas a number of US funding managers maintain giant stakes in UBS — together with Dodge & Cox, MFS Funding Managers and Artisan Companions — the financial institution is hoping the largest funding teams will match the dimensions of their stakes in US lenders.
Wellington, for instance, the Boston-headquartered funding group with $1.4tn of belongings, holds a $5bn stake in JPMorgan, a $2.8bn stake in Morgan Stanley and a $900mn holding in UBS.
Elsewhere, Capital Group 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 inventory. In contrast, the secretive LA-based fund supervisor with $2.7tn of belongings beneath administration owns simply $180mn of UBS inventory.
UBS was certainly one of a number of lenders that Capital lower its stakes in as a part of a €7bn sell-off of European financial institution shares this yr. The Monetary Occasions revealed final month that the disposals had been the results of a single influential portfolio supervisor, Nick Grace, souring on the sector on the again of the battle in Ukraine and the specter of a worldwide recession.
Extra reporting by Laura Noonan
This text has been amended to right the quantity of belongings managed by Capital Group