UBS fights to reclaim departed Credit Suisse assets

UBS fighting to reclaim $20B in Credit Suisse assets

November 7, 2023 5:07 PM

UBS's wealth management unit welcomed $22 billion in net new client money in its third quarter, about $3 billion of which came from its former rival Credit Suisse.

Even so, UBS CEO Sergio Ermotti said in an earnings call on Tuesday that not everything has been a gain from his firm's acquisition of Credit Suisse in June. All told, over the past year, there has been an exodus of about 500 client advisors and roughly $20 billion in assets they had under management.

"And let's say that we're going to lose further assets because some of those people just left more recently, and we're going to see some outflows later on," Ermotti said. "But we are totally convinced that it's not going to be a multiple of that $20 billion, the future outflows. And we are working hard to recapture some of it."

For all of its businesses, UBS reported a total net loss of $785 million for the quarter, driven in part by $2 billion in costs from its acquisition of Credit Suisse in June. The Zurich-based bank said it expects to log another $1 billion in costs from that purchase in the fourth quarter.

The strong results for UBS's wealth management unit came even as it decided to offload $5 billion worth of assets it manages for high net worth clients. UBS is going through the pieces of the former Credit Suisse to figure out which are least in line with its risk tolerances and business plans and are worth jettisoning.

Besides the $5 billion UBS is consigning to a wind-down unit called Non-core and Legacy, it's classifying $30 billion as "related to non-strategic relationships." About half of that is expected to be offloaded by the end of 2026.

For more highlights from UBS's third-quarter earnings, scroll down. To read about the second quarter, click here. For the first-quarter results, follow this link.

Financials

UBS's net loss of $785 million was down from a profit of $1.73 billion in the third quarter of 2022. This year's loss came on nearly $11.7 billion in total revenue, a figure up 41% year over year.

UBS's Global Wealth Management unit contributed $5.8 billion in total revenue to the third quarter. That figure was up 21% year over year. The increase was "mainly due to the consolidation of Credit Suisse revenues," UBS said.

The division's profits meanwhile were down 31% year over year to just over $1 billion. UBS noted that the figure for the third quarter of 2022 had been boosted by more than $200 million logged from the sale of advisory businesses in Spain and Switzerland.

"The decrease was also due to the acquisition of the Credit Suisse Group," UBS said in an earnings statement.

UBS's Americas division within its Global Wealth Management unit — including the U.S., Canada and Latin America — reported a $307 million profit on $2.6 billion in revenue. The revenue figure was down 2% year over year.

Advisors

UBS's advisor headcount for all of its geographic regions was 10,278, up 11% from 9,230 year over year. Its Americas division reported having 6,142 advisors, down about 2% year over year.

UBS reported nearly $1.2 billion in compensation costs to advisors licensed to provide advice in the Americas. That was up 5% year over year. It had nearly $1.8 billion in recruitment loans outstanding to advisors on Sept. 30.

Assets

The Global Wealth Management unit reported a 2% year-over-year decrease in invested assets of $2.9 trillion in the quarter. That was driven by roughly $49 billion in market losses and a $19 billion drop related to unfavorable currency exchange rates. That was offset by the $22 billion in net new money for the quarter.

UBS's Americas division reported $300 million in net new assets for the quarter.

Comment

Ermotti said in the earnings call that the third quarter of this year came about a year after fears over instability at the former Credit Suisse started to drive its client advisors and their assets under management elsewhere.

"Despite the massive outflows that you saw, the amount of assets that were able to be moved by the people that were serving those assets has been within what we expected, on average no more than 20%," he said. "So the first big issue, as I said, we have been able to keep the vast majority of the assets."