Americans Love UBS. And Now The Banking Giant Gets Bigger After Merger With Credit Suisse
Following its $3.2 billion acquisition of Credit Suisse, UBS is all set to become one of the global mega banks. The international wealth management is the heart of UBS's operation, and has over $5 trillion in invested assets post the merger, according to CNBC.
More than half of the bank’s customers are based in the United States, the report added. Experts say that Americans love UBS because of discretion offered by Swiss law.
“You can access their operations in Singapore, in New York, in more exotic places. But at the core, they will not be subject to some political influence because the Swiss government is leaving them alone, or at least that’s the perception,” Nicolas Véron, a senior fellow at both the Peterson Institute for International Economics in Washington, D.C., and the Bruegel think tank in Brussels, was quoted as saying by CNBC.
What are G-SIBS?
A global systemically important bank or G-SIB is a bank whose systemic risk profile is deemed to be of such importance that the bank’s failure would trigger a wider financial repercussion and may threaten the global economy.
What Is UBS?
UBS, formally called the Union Bank Of Switzerland, is a multinational diversified financial services company headquartered in Zurich and Basel. The body is involved in all the major financial activities around the world, including retail and commercial banking.
UBS has a presence all over the world. It operates in more than 50 countries with more than 60,000 employees, as per Investopedia.
What is The UBS-Credit Suisse Deal?
The 167-year-old Credit Suisse Bank came to the brink of collapse when UBS decided to rescue it with a merger engineered and implemented by the Swiss authorities last month. UBS eventually agreed to buy Credit Suisse for around 3 billion Swiss francs, which is only a fraction of its earlier market value.
The Swiss authorities and UBS are trying to close the merger as soon as possible, in an effort to retain the lender's clients and employees, as per Reuters.
What Does This UBS-Credit Suisse Merger Mean For The Market?
According to CNBC, this merger could catapult UBS out of the bunch along with Deutsche Bank, BNP Paribas and HSBC and into the realms of companies like JP Morgan.
How Did UBS Push Switzerland To The Top Of International Finance?
When the bank fee is higher and the return on your money is lower then there has to be some other reason why you would want to keep your money there. It's the secrecy!
In Switzerland, a person could go to prison for revealing client information. This whole system of finance made the country a magnet for international wealth.
Why Do Americans Love UBS So Much?
According to UBS, American clients keep their money with them to avoid taxes. The three keys in the UBS logo -- Security, Trust, and Discretion -- provide Americans enough reason to store their money in this G-SIB.
The UBS-Credit Suisse Merger Creates The Fourth Largest G-SIB
The merger surely reinforced UBS's position as one of the leading universal banks. Investors are, however, anxious whether UBS will integrate the Swiss banking division into its own domestic business, sell it or even split the share offering.
"One of the reasons that support the idea of a spin-off is probably the fact that UBS has gotten too big after swallowing Credit Suisse for the Swiss market," said Ipek Ozkardeskaya of Swissquote.
"Another could be to maximize the Swiss branch potential and to offer Swiss clients an alternative to UBS."
JP Morgan analysts said splitting it off as an independent arm could create a division valued at a minimum of $10 billion for UBS, as per AFP. "We know that a spin-off could unlock value," said Ozkardeskaya.
