UBS AG

UBS AG is a Swiss bank founded in 1998 as a result of the merger of Union Bank of Switzerland and Swiss Bank. By October 2016, UBS operates in more than 50 countries worldwide and is the world's largest private bank.

Aktivs

2022: Total assets of UBS and Credit Suisse - 208% of Swiss GDP

Data as of December 31, 2022 Toronto-Dominion Bank Data - January 31, 2023

Business in Russia

Main article: UBS in Russia (Yu Bi Es Bank)

History

2024

Introduction by the Swiss authorities of control over the activities of the bank

On July 4, 2024, FINMA, the Swiss financial market watchdog, imposed controls on the bank's UBS operations after it completed a takeover of its rival in Credit Suisse. These measures are taken due to concerns that the combined structure may increase interest rates on loans.

The implications of the deal between UBS and Credit Suisse are said to have Reuters been discussed at a meeting between FINMA, antitrust watchdog ComCo and the Swiss National Bank. After the merger, UBS took over all of Credit Suisse's rights and responsibilities. The deal gives UBS the opportunity to accelerate a restructuring programme aimed at cutting approximately 3,000 jobs in Switzerland.

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Bloomberg

FINMA regulators previously concluded the takeover "does not raise any competition concerns." However, ComCo recommended exploring the deal as the combined structure dominates some markets. There is a vigorous debate in Switzerland about the size and power of the combined bank, UBS, which analysts say is a leading player in areas such as credit and debt markets in the country. Concerns have been raised that the merger could lead to an increase in the cost of loans in the future.

However, on July 1, 2024, UBS Bank announced the completion of the merger of its internal division with Credit Suisse operations. Against this background, Andre Helfenstein, CEO of Credit Suisse Switzerland, decided to leave the organization.

The transition of most client transactions in Switzerland to the UBS platform will take place in 2025. The process will proceed gradually, taking into account the interests of our clients, - said Sabine Keller-Busse, President of UBS in Switzerland.[1]

70 cut in Hong Kong and Singapore as profits fall

In March 2024, UBS Group AG began cutting jobs in its Asian private banking division as falling profits put pressure on the region's biggest wealth manager.

The Swiss bank will cut about 70 people, mostly in Hong Kong and Singapore.

In February, UBS CEO Ermotti warned of a difficult year.

2023

Record $29bn profit in quarter due to emergency takeover of Credit Suisse

In Q2 2023, UBS Group AG made its biggest quarterly profit ever in the banking business in an emergency takeover of Credit Suisse and confirmed it will fully integrate its former rival's local business by next year.

The $29 billion profit is a result of the accounting difference between the $3.8 billion price UBS paid for Credit Suisse and the balance sheet value of the acquired lender. Underlying earnings for UBS Credit Suisse first combined quarter were $1.1 billion.

The bank will reduce about 3,000 positions as part of integration in Switzerland.

Payment of $1.44 billion for deceiving customers with mortgages

On August 14, 2023, the Swiss bank UBS Group AG announced that it had reached a settlement agreement with the US Department of Justice (DOJ) as part of a process initiated in 2018.

We are talking about civil claims related to the issue, underwriting and sale of securities secured by mortgages for housing. The U.S. government accused the Swiss financial institution of defrauding investors in selling 40 mortgage bond issues in 2006 and 2007. The bank, as noted, conducted relevant activities on the eve of the global financial crisis.

U.S. government accuses UBS of defrauding investors in selling 40 mortgage bond issues in 2006 and 2007

UBS deliberately made false and misleading statements to buyers of these securities regarding the characteristics of the mortgages they were secured with, the Justice Department said in a statement.

The government complaint alleged that UBS Bank was aware of the unreliability of high-risk mortgages, but continued to operate in this direction for the benefit.

UBS knew that the value of the property associated with a significant number of securitized loans was not confirmed, and that a significant number of loans were issued in violation of consumer protection laws, the case file notes.

Under the terms of the agreement, UBS will pay $1.44 billion. Representatives of the Swiss bank stressed that this would not affect the activities of the organization in any way, since the amount was reserved earlier in the trial.

UBS became the last major bank to sign a settlement agreement with American authorities in the case. Nearly 20 financial institutions have been fined in total, including JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup. The total amount of penalties amounted to $36 billion.^[2]

After the takeover of Credit Suisse, the bank's assets rose to $5 trillion

UBS completed an emergency takeover of Credit Suisse in June 2023, creating the Swiss banking and wealth management giant with a balance sheet of $1.6 trillion and controlling more than $5 trillion in assets.

As a result of the deal, the National Bank of Saudi Arabia (SNB) stake in Credit Suisse became just 0.5% of UBS.

Plan to cut 30% of staff or 36,000 jobs worldwide

UBS Group AG plans to cut staff by 20-30% after the takeover of Credit Suisse Group AG is completed, cutting up to 36,000 jobs worldwide, Swiss newspaper Sonntagszeitung reported in April 2023, citing a top UBS executive.

Switzerland will reduce up to 11,000 employees, the newspaper said on April 2. At the end of 2022, the two credit institutions together employed nearly 125,000 people, about 30% of them in Switzerland.

World banks cut more than 60 thousand jobs in 2023

Allocation of $665 million to cover costs associated with toxic debts in the United States

UBS has been hit by spending on old toxic debts ahead of Credit Suisse's "difficult" challenge. Problem debts arose 15 years ago after the financial crisis.

UBS Group's Q1 2023 profit halved after it committed 665 million to dollars legal costs related to U.S. mortgage-backed securities that played a central role in the 2008 global financial crisis.

Sergio Ermotti succeeds Ralph Hamers at head of UBS Group

Swiss bank UBS Group AG appointed Sergio Ermotti as chairman, replacing Ralph Hamers. Proceedings are underway against the latter in court.

Buying Credit Suisse for just $3 billion to avoid its bankruptcy

On March 19, 2023, on Sunday, Credit Suisse essentially went bankrupt through a forced merger with UBS Bank. Although in official statements they diligently tried to avoid the expression "bankruptcy," but you need to call the events as they are. For a number of reasons and circumstances, the continuation of Credit Suisse's independent activities has become impossible.

The 166-year history of the bank ended almost instantly. The biggest bank liquidation in Swiss history, the biggest asset bankruptcy since Lehman Brothers and the biggest bank drop in Europe. A significant deformation of the sample of the "quiet financial harbor" in Switzerland, carefully built for more than 100 years.

The bank, which has the highest liquidity deposit coverage ratio (about 50%), went to the bottom in just a week after a massive reputational hit, a flight of customers/investors and the closure of limits on the bank by leading financial counterparties.

UBS agreed to buy Credit Suisse in a government-brokered deal. The deal is worth 3 billion francs (the price is less than half the value of Credit Suisse at the close of trading on March 17 and more than 40 times cheaper than at its peak in 2007) in a deal with the government that includes extensive government guarantees and the SNB.

The Swiss National Bank allocates up to 100 billion francs as liquidity support to UBS, while the government provides a guarantee of 9 billion francs for possible losses from Credit Suisse assets as part of the merger, adaptation and restructuring of the business.

In fact, UBS buys out a bank with assets of over 530 billion francs and a cash position of more than 120 billion for 3 billion, secured by a guarantee of covering the cash gap by 100 billion from the SNB and losses of 9 billion from the government - a phenomenally successful deal for UBS, the Spydell Finance channel noted.

The merger of the deal was carried out without shareholder approval, with every conceivable and unthinkable breach of formal protocols in excess of a short time. This is the fastest takeover of a bank of this level in the history of the banking industry (from the moment of acute problems), both in Europe and in the United States.

The Swiss Government adopted an emergency decree to avoid the need for shareholder approval, destroying the principle of transparency and legal certainty, i.e. the conditions when there is a deviation from the rules depending on the situation.

Shareholders receive 3 billion, but investors in bonds are reset to 16 billion francs. The deal would result in the "full write-down" of the tier one bank's additional bonds, Swiss financial regulator FINMA said in a statement. The bond write-off was the biggest loss for Europe's $275 billion AT1 market, far surpassing the only €1.4 billion write-down of this type of securities before in 2017 at the time of Banco Popular's bankruptcy and takeover by Banco Santander. This is a special type of bond for banks, integrated in 2009 to increase the capital of banks acting as a buffer in order to increase capital adequacy.

The Central Bank of Saudi Arabia invested in Credit Suisse at the level of 3.82 francs per share now it will receive only 0.25 francs per paper. The Bank of Saudi Arabia invested $1.5 billion and now it has only about $100 million left.

Credit Suisse's forced takeover deal is strange enough and questionable at first glance. At the time of its announcement, there are no details on the merger of UBS and Credit Suisse, and the process of coordinating organizational and legal points will last at least until the end of 2023, but apparently the takeover goes to the entire division along with the profitable segment of traditional banking.

Later in May 2023, UBS claimed it had been rushed into an unwanted merger to save Credit Suisse. The company estimates the loss from the takeover will be about $17 billion.

2022

Searches in offices in the case of Alisher Usmanov

On November 8, 2022, the offices of UBS Group AG in Frankfurt and Munich are searched by German prosecutors as part of a broader investigation related to Russian businessman Alisher Usmanov, who came under sanctions amid the conflict in Ukraine, sources said.

UBS said it was cooperating fully with authorities, while declining to comment on the reasons for the search.

Der Spiegel, which reported the searches earlier, said German investigators were specifically looking into a number of bank transactions from 2018 to 2020 worth just €2m.

$22 billion of Russians in the bank may fall under sanctions restrictions against the background of Russia's special operation in Ukraine

Under the management of the Swiss bank UBS is approximately $22 billion, which belongs to Russians who do not live in the Eurozone or Switzerland, which means they may fall under the restrictions imposed after the start of Russia's special military operation in Ukraine.

Buying online investment advice service Wealthfront

On January 26, 2022, the Swiss bank UBS announced the acquisition for $1.4 billion of the provider of automated asset management services Wealthfront, which is developing an online investment consulting service. Read more here.

2021

Disclosure of the cartel in the Forex market

In early December 2021, the European Commission fined UBS, Barclays, RBS, HSBC and Credit Suisse 344 million euros for participating in a cartel in the Forex spot trading market.

Traders ran cartels from online chats, sharing sensitive information and trading plans that allowed them to make informed decisions about buying or selling currencies, the regulator said. In this case, traders periodically used a chat called "Sterling Lads" to plan their purchases and sales.

UBS Group AG avoided a €94 million fine under the Commission's leniency provisions for revealing the cartel's existence.

HSBC was fined €174 million.

Barclays was fined €54 million.

RBS was fined €32 million as part of an agreed settlement that allowed them to reduce sanctions by 10%.

Credit Suisse is obliged to pay 83 million euros and will not receive any reduction under the usual procedure.

Allowing most employees to work from home on an ongoing basis

At the end of June 2021, the financial company UBS allowed most employees to work remotely on a permanent basis. With this initiative, the bank intends to gain an advantage over competitors, who, against the background of the weakening coronavirus pandemic COVID-19 , are returning staff to office work.

The bank's internal analysis found that two-thirds of its employees hold positions suitable for working from home on a full-time basis, and they are the ones who will get the new benefits. Other employees, such as traders and branch workers, must definitely work on the ground, reports. Bloomberg

UBS allowed most staff to work from home full-time

Employees will be able to apply for hybrid work schedules once local authorities allow workers to return to the office full-time, according to the company's memo. Employees in Australia, China, Hong Kong, New Zealand and Taiwan can already start discussing this issue for a new work schedule.

Hybrid options will be introduced separately in each country, depending on the local epidemiological situation, "explained UBS spokeswoman Nadine Reif.

UBS's actions stand in stark contrast to the policies of many of the company's American competitors. Goldman Sachs Group bank demanded that almost all employees return to the office. JPMorgan Chase & Co. ordered most of its employees in the United States to start the usual work schedule from July 6, and Morgan Stanley CEO James Gorman said that "if an employee can visit a restaurant in New York, then it will not be difficult for him to return to the office."

However, UBS clarified that working from home implies being tied to the country of residence and work and that "hybrid work doesn't mean you can work anywhere, anytime." Special rules will apply to employees whose office is in a country or province other than their primary residence, as well as employees who are on international business trips.^[3]

Fine for violating antitrust rules during the 2008 crisis

At the end of May 2021, the European Commission found seven investment banks guilty of violating antitrust rules during the 2008 global financial crisis, with three of them receiving fines. According to the decision of the Commission, Nomura, UBS and UniCredit must pay 371 million euros ($453 million). Read more here

Payment of bonuses in the amount of $40 thousand to novice bankers to stop staff turnover

In mid-May 2021, UBS AG announced that it would pay its banking analysts a one-time bonus of $40,000 in promotions to support young employees and stop staff turnover.

The Swiss bank will provide bonus payments to analysts promoted to associate employees. According to one of the sources, this amount is about 30% of the annual base salary of a new employee who received a promotion. Sources of information about the UBS bank declined to be named because the information disclosed is considered confidential. A spokesman for Hong Kong-based UBS also declined to comment.

UBS pays $40,000 bonuses to novice bankers to stop staff turnover

In 2021, banks began to raise salaries for junior employees in order to prevent staff turnover and ease discontent among workers amid a sharp increase in the number of transactions due to the pandemic. Since Goldman Sachs junior analysts complained about the debilitating workload and irregular opening hours, banks have been trying to make amends.

UBS 'one-time bonuses double the amount Credit Suisse Group and Wells Fargo agreed to pay to their junior bankers. Other lending institutions, such as HSBC Holdings, also plan to raise wages and secure junior promotions, while Houlihan Lokey. even offered some workers full paid leave due to increased workload during the pandemic.

At the same time, UBS is known to be actively cutting jobs. The Swiss bank intends to restructure and save $300 million, including job cuts in various regions and business units. The bank declined to give specific figures for the upcoming cuts.^[4]

2020: $200m UBS Next venture capital fund set up to invest in fintech

At the end of October 2020, UBS Group announced the creation of a $200 million venture capital fund to invest in fintech companies. The financial giant intends to digitalize its services with a new initiative and find new ways to interact with customers. Read more here.

2019: Number of robot assistants at UBS bank rises 20-fold in 3 years

By early February 2019, the number of software robot assistants at UBS had grown 20-fold compared to 2016, when the bank first launched 50 services as part of its digital business transformation.

A thousand robots help employees, freeing them from routine tasks such as settlement and cash transactions, converting unstructured data from emails and handwritten documents into a digital form that is more convenient to use, and detecting anomalies in payments. Most robots are in the operations department. In 2019, the bank plans to introduce another 500 robotic assistants in the hope of reducing time costs by 10%. Potential uses for bots also include processing a variety of paper documents related to corporate actions and the adaptation of new employees.

By the beginning of February 2019, the number of software robot assistants in UBS increased 20 times compared to 2016, when the bank first launched 50 services as part of a digital business transformation

Robots successfully work with huge amounts of data, detecting patterns and correlations, while people perfectly use the results in finding the best solutions for customers - the bank's management believes that such cooperation can become the basis for a "real superman."

In 2018, the bank put 500 robots into operation, but eventually shut down 100 of them. However, representatives of the bank argue that this is a natural process, because some tasks are no longer required. It is difficult to quantify the financial benefits of the introduction of robots, but the bank has already noted an increase in the accuracy of work.

The use of robotic mechanisms is traditionally considered to be the reason for staff reductions. The management of UBS Bank notes that about 350 employees were trained and learned to develop bots and another 2,000 people took preliminary courses on this topic.^[5]

2018: Authorities probe into boycott against Apple Pay

In November 2018, the Swiss Competition Commission (WEKO) launched an investigation into an alleged boycott of payment services Apple Pay and Samsung Pay by financial firms including Credit Suisse, UBS, Aduno Holding and PostFinance, Swisscard. Offices are being searched.

According to WEKO, the economic competition law enforcement body, the investigation is being conducted to establish whether companies have entered into such an agreement among themselves.

Authorities want to force UBS and Credit Suisse to plug Apple Pay. Searches began

Credit institutions are suspected of agreeing to prevent the use of credit cards with Apple Pay and Samsung Pay in favor of the Swiss rival of these payment systems - Twint. WEKO told the Financial Times that the investigation was launched after receiving complaints about potential collusion.^[6]

Credit Suisse said the company was surprised by the investigation and was confident that the regulator's claims were unfounded.

We already offer consumers in Switzerland access to Apple Pay and Samsung Pay through our subsidiary Swisscard, 50% owned by Credit Suisse. In addition, we have been in talks with companies such as Apple, Samsung or Google for several months discussing how their mobile payment solutions can be offered to our customers, the financial conglomerate said in a press release.

A Credit Suisse spokesperson also told CNBC that the company will continue to work with Twint.

We do not comment on the ongoing investigation, but we would like to note that in 2016 we tried to negotiate with Apple Pay regarding the use of UBS in credit cards. Although we have proposed several alternatives, unfortunately an agreement cannot be reached, the finance company said.

PostFinance said it was cooperating with the antitrust authority.

2016: $1 billion investment in IT

On October 17, 2016, UBS became aware of a major investment in updating its IT infrastructure. Improving computer systems, the largest private bank continued the program of cost optimization.

According to Reuters, citing UBS private capital management operations director Dirk Klee, the company will invest 1 billion Swiss francs (about $1 billion) in standardizing its IT platform, developed as part of its flagship business - private capital management.

The world's largest private bank invests $1 billion in updating IT infrastructure

It's about integrating into a single platform our historically fragmented infrastructure deployed around the world. Thus, we want us to have the same processes, the same UBS approach, and we also want to increase synergy and development stage in the back office, "explained Dirk Kli.

He did not name the amount that UBS expects to save by modernizing its IT infrastructure.

The publication notes that the bank is also trying to reduce hundreds of millions of dollars in expenses in the private capital management unit through a new organizational structure and sets itself the task of achieving net savings of 2.1 billion francs ($2.1 billion) by the end of 2017.

Since the onset of the financial crisis, banks have sought to simplify corporate structures that have grown rapidly in the best of times for them, as well as reduce business in markets where companies are less competitive.

UBS unifies the IT structure as part of the One Wealth Management Platform project, launched in 2013 and completed by the end of 2018. With this initiative, the bank plans to simplify the implementation of tested digital services such as SmartWealth.

This online private equity management platform was launched in pilot in the UK in October 2016 and, if successful, could cash in in Europe, Asia Pacific and other markets. SmartWealth (which provides UBS customers with financial advice related to, for example, where to invest depending on goals, funds and risk) is designed to attract more so-called premium customers to the bank (in the English terminology mass affluent), who are below millionaires and billionaires in terms of income.^[7]

2011: Erroneous concerns in the development of cloud service providers

Cloud computing may be fueling another bubble in the IT market, similar to that of the dot-com boom era. This, with reference to the results of a study by the Swiss consulting company UBS, was reported in February 2011 by the American edition of Business Insider.

The UBS study is based on the comparison of the courses of the 40 most expensive IT companies now and in March 2000, during the peak of the Dotcom boom. It turns out that most of today's leaders are somehow related to cloud computing, including Salesforce.com, Netflix and Akamai.^[8]

Although today's leaders show healthier P/E ratio, it is alarming that today's leaders are quickly moving away from the rest of the IT sector: while the industry as a whole is in decline, the stock prices of these companies are rising rapidly. This distinguishes today's situation from that of a decade ago, when growth spanned the entire IT sector as a whole.

UBS analysts conclude that today investors are paying special attention to leading companies. If these companies do not meet their expectations, this can lead to dire consequences.

In addition, UBS researchers examined the dynamics of capital expenditures on data centers used to provide cloud services. During the dot-com boom, the situation was similar, they state.

Data Center CAPEX by Year by BusinessInsider, UBS (based on FactSet, IBES), 2011

The high growth rates of data centers over the past two years have ensured an increase in the share price of cloud suppliers, but whether this trend can hold in the current year is a question, concludes UBS.

Notes