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Former Credit Suisse employees in the UK who transferred to UBS retain the right to paid sabbaticals, a benefit not available to UBS staff, highlighting disparities in employee perks post-merger. They can take up to three months of leave every five years, with salary reductions in subsequent months. As UBS undergoes significant job cuts, it aims to streamline its workforce from nearly 109,000 to 85,000 by 2026, while addressing cultural integration challenges.
UBS faces significant challenges in its Global Wealth Management division, particularly in the USA, where the cost/income ratio soared to 92.4%. Despite managing $2 trillion in assets, profitability remains low, with 61% of advisors generating only 19% of pre-tax profits. The bank aims to improve its pre-tax profit margin to 15% by 2027, but the path to achieving economies of scale remains unclear, compounded by a recent outflow of new money in the Asia-Pacific region.
UBS reported a profit of $5.1 billion for 2024, significantly lagging behind JP Morgan's $54 billion and Morgan Stanley's $13.4 billion. While private banking income rose, the bank's overall growth remains sluggish, with a high cost/income ratio of 85% and ongoing challenges in investment banking. UBS is in the process of integrating Credit Suisse, aiming for substantial savings and a reduced workforce by 2026, yet faces fierce competition in retaining clients in Switzerland.
Lukas Gähwiler, UBS Vice-Chairman, has relocated from Langnau am Albis to Oberägeri, a tax haven in Zug, ahead of his retirement. This move allows him to significantly reduce his tax burden, as Oberägeri offers lower municipal and cantonal tax rates compared to his previous residence. As he approaches retirement, Gähwiler's decision reflects a trend among the wealthy to optimize tax benefits related to pension payouts.
UBS's acquisition of Credit Suisse, led by Chairman Colm Kelleher and CEO Sergio Ermotti, involved a CHF 3.8 billion payment and assumption of CHF 5.9 billion in losses, with future success hinging on political decisions regarding bank capitalization. Switzerland faces a critical choice: maintain a world-class financial center or retreat to domestic operations, impacting UBS's competitiveness.
UBS aims for a CET1 return of around 15% by 2027, despite market skepticism over potential capital requirements from Finma. The bank has significant improvement potential in U.S. wealth management, where it lags behind competitors like Morgan Stanley, and seeks a full license to expand its offerings. UBS's current market value-to-equity ratio is just over one, indicating substantial valuation potential compared to U.S. mega-banks, which trade at twice their equity.
UBS's precarious position, with a mere 5% equity ratio against a massive balance sheet, highlights the risks of being "too big to fail." The implicit state guarantee encourages reckless behavior, and a crisis could devastate the Swiss economy. Relocating abroad could mitigate systemic risks, allowing UBS to operate more safely in the global market.
UBS, a leader in sustainable finance, has significantly increased its sustainable investments to US$292.3bn in 2023 and aims to reduce emissions intensity in key sectors by 2030. Following its acquisition of Credit Suisse, UBS continues to prioritize sustainability, achieving high ratings in global indices.
Sergio Ermotti dominated Swiss media in 2024 with 4,755 mentions, significantly outpacing other business leaders. Despite a 29% drop from 2023, he remains the most prominent figure, while Thomas Jordan and Thomas Schlegel follow with 3,973 and 2,608 mentions, respectively. The media landscape also saw notable mentions related to the Benko scandal and political initiatives against the EU.
The PUK report reveals that UBS initiated the CHF 16 billion write-down of AT1 instruments during its takeover of Credit Suisse, contradicting earlier claims that Finma acted independently. This new information may bolster the case for plaintiffs seeking compensation for their losses, as it suggests Finma's actions were influenced by external pressures.
Colm Kelleher
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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