The media, citing insiders, report that UBS Group AG intends to shut down Credit Suisse accounts with a small value, the number of which currently stands at several thousand.
In this case, it means accounts in the wealth management arm of a financial institution that operates in the Asia-Pacific region. Insiders, who used the right of anonymity, say that as part of the mentioned planned actions, the lender intends to exit relationships with poor returns.
Currently, the financial institution is checking accounts with a balance of about $2 million or less. This was reported by the media, referring to insiders. According to the journalists’ informants, many of the specified accounts are in Asian business centers such as Singapore and Hong Kong.
The plans reported by insiders are a logical solution in the context of broader efforts by UBS, led by Sergio Ermotti, to carve out elements of the functional structure of Credit Suisse that are not classified as necessary. In the context of the relevant goal setting, ending relationships with poor returns is a natural move.
It is worth mentioning that last year UBS acquired Credit Suisse, which had been its competitor for many years. This deal was implemented through the mediation of the Swiss authorities. The cost of the business agreement providing for the entry of Credit Suisse into the ownership structure of UBS amounted to 3 billion Swiss francs ($3.4 billion).
In recent years, the world’s largest wealth managers have perceived Asia as a kind of space of opportunity for further growth. At the same time, the downturn, which in a sense is the current configuration of China’s economic system, has caused many customers in the region to conclude fewer transactions.
UBS currently controls assets worth about $3.9 trillion in its wealth management arm. Of this amount, 17% of the assets are in the Asia-Pacific region.
Insiders cited by the media say that UBS still wants to keep clients above that threshold. According to them, accounts with a lower value do not bring high enough returns.
Customers with large balances tend to make larger transactions. For the financial institution, the mentioned consumer category is more important from the point of view of commercial considerations, since in this case, there are higher fees.
More than four years ago, Credit Suisse carved out an arm in Europe to improve the quality of service for customers who are millionaires. In this case, the lender was focused on interacting with those consumers who needed investment advice. At the same time, the financial institution was not aimed at providing bespoke services that are in demand among its billionaire clients.
The deal on the takeover of Credit Suisse by UBS was closed in June 2023. After that, the financial institution headed by Sergio Ermotti formed a list of the main goals for the integration of its former competitor. As part of the relevant intentions, one of the most important tasks was saving costs of about $13 billion. Sergio Ermotti and the chairman of the board of the financial institution, Colm Kelleher, warned that 2024 will be more difficult in terms of efforts to achieve the goal of reducing costs.
Before the takeover by UBS, Credit Suisse had been engaged in activities aimed at scaling up operations in Southeast Asia for about ten years. In this region, a financial institution provided lending services to billionaire business families. Against the background of the relevant activities, a kind of status of Credit Suisse has been formed as a popular foreign bank for entrepreneurs. Potentially, this position in the reputation area could become a platform for UBS to boost its ambitions.
A few months before the takeover by Credit Suisse’s competitor managed to raise new money at deposit rates significantly higher than those of other banks. Moreover, a financial institution has dialed back some strict controls in Asia designed to counter money laundering. This decision was made after dissatisfaction from customers and individual employees of Credit Suisse.
As we have reported earlier, UBS Chair Predicts Challenging 2024.
