Why Credit Suisse's wealth managers can breath a sigh of relief
UBS’ long awaited Q2 results, which the bank delayed from the start of this month to its end, have finally come. And they contained some interesting clues as to what it’ll be doing with the Credit Suisse people it’s inherited – especially its wealth managers.
The headline figure from the results – $29bn in profit – was a bit of an accounting gain as opposed to a blockbuster performance, as it included $28.9bn in negative goodwill from the acquisition (talk about a good deal on a $3.25bn purchase). “Real” profit was only $1.1bn, compared to $2.1bn this time last year.
Crucially for private bankers, UBS said in its analyst earnings call that it was aiming to “retain all wealth manager relationships” from the merger, noting that Credit Suisse added value in a number of strategic locations including Brazil, Southeast Asia (not including Singapore), and the Middle East.
It also helps wealth managers that money no longer seems to be pouring out of the bank - CS Wealth Management went from a $30bn net outflow in Q2 this year to a $1bn inflow so far in Q3. Whilst that’s not quite up to UBS’ $7bn inflows, it’s still a strong case to not bring out the axman quite yet.
Investment bankers, however, might be sweating. A Deutsche Bank research note said that Credit Suisse’s standalone pre-tax loss of CHF2bn ($2.3bn), was “driven mainly by significant revenue attrition in the investment bank.” UBS’ investment bank, however, was “broadly in line with the European/US bank peer average.”
Additionally, UBS has also made it clear that it was holding onto Credit Suisse’s crown jewel – CS Schweiz, its domestic retail operation, also known as the “Swiss bank”. That might come as some surprise – the combined entity would hold 30% of domestic deposits and would probably raise a serious eyebrow in most anti-trust jurisdictions. The Swiss, it seems, don’t seem to mind for now.
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