UBS offers premium rates to regain clients, sources say
Swiss lender seeking to reclaim almost $500bn in cash and assets that left stricken rival Credit Suisse in past two years
04 October 2023 - 13:33
byNoele Illien and Stefania Spezzati
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The UBS office in New York, US. Picture: BLOOMBERG/ANGUS MORDANT
UBS is trying to attract customers with above-market rates on deposits, according to people familiar with the bank’s activities, as it seeks to boost inflows after taking over stricken peer Credit Suisse.
Clients who deposit their cash at Credit Suisse, now a unit of UBS, earn about 1.8% on Sf50,000 (R1.05m) or more held for three months, according to one of the people, who asked to remain anonymous because the matter is private.
At Zuercher Kantonalbank, similar deposits with a minimum investment of Sf100,000 receive interest of 1.34% and at Raiffeisen they earn 1.2%, spokespeople for the two banks said.
“As is common in the market, there may be specifically tailored offers that can also depend on an overall client relationship,” Credit Suisse said in response to a request for comment.
UBS declined to comment on three-month deposit rates. For a one-year fixed deposit, the bank offers 1.75% as part of an ongoing campaign.
Credit Suisse suffered an exodus of client funds that brought it to the brink of collapse and led to the first merger ever of two globally systemically important banks.
Regaining clients’ money and trust in Switzerland is crucial for UBS, which oversees $5.5-trillion in assets for wealthy clients since taking over its former rival. The bank also needs to try to retain clients that would have had funds in both banks and may now look to spread their risk.
The two banks held a combined 26% of deposits in Switzerland in 2022, according to data from the Swiss National Bank.
Outflows from Credit Suisse’s wealth management franchise were identified as a critical risk for UBS by JPMorgan analyst Kian Abouhossein in a note on Monday.
Abouhossein said higher deposit rates were potentially being used to limit outflows at Credit Suisse and had been weighing on the bank’s ability to bolster revenue.
Still, he said there was potential for UBS to reclaim part of the almost $500bn in deposits and assets that left Credit Suisse over the past two years.
Credit Suisse reported net asset outflows of Sf39bn in the second quarter. However, UBS said the outflows had slowed and then reversed in June, with Credit Suisse reporting net deposit inflows of $18bn in the second quarter.
UBS CEO Sergio Ermotti has said he aims to get back the Credit Suisse assets.
“Winning back [the assets] ... is resetting our starting moment, and then from there on we are going to look at our combined growth aspirations,” Ermotti said at a conference in September.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
UBS offers premium rates to regain clients, sources say
Swiss lender seeking to reclaim almost $500bn in cash and assets that left stricken rival Credit Suisse in past two years
UBS is trying to attract customers with above-market rates on deposits, according to people familiar with the bank’s activities, as it seeks to boost inflows after taking over stricken peer Credit Suisse.
Clients who deposit their cash at Credit Suisse, now a unit of UBS, earn about 1.8% on Sf50,000 (R1.05m) or more held for three months, according to one of the people, who asked to remain anonymous because the matter is private.
At Zuercher Kantonalbank, similar deposits with a minimum investment of Sf100,000 receive interest of 1.34% and at Raiffeisen they earn 1.2%, spokespeople for the two banks said.
“As is common in the market, there may be specifically tailored offers that can also depend on an overall client relationship,” Credit Suisse said in response to a request for comment.
UBS declined to comment on three-month deposit rates. For a one-year fixed deposit, the bank offers 1.75% as part of an ongoing campaign.
Credit Suisse suffered an exodus of client funds that brought it to the brink of collapse and led to the first merger ever of two globally systemically important banks.
Regaining clients’ money and trust in Switzerland is crucial for UBS, which oversees $5.5-trillion in assets for wealthy clients since taking over its former rival. The bank also needs to try to retain clients that would have had funds in both banks and may now look to spread their risk.
The two banks held a combined 26% of deposits in Switzerland in 2022, according to data from the Swiss National Bank.
Outflows from Credit Suisse’s wealth management franchise were identified as a critical risk for UBS by JPMorgan analyst Kian Abouhossein in a note on Monday.
Abouhossein said higher deposit rates were potentially being used to limit outflows at Credit Suisse and had been weighing on the bank’s ability to bolster revenue.
Still, he said there was potential for UBS to reclaim part of the almost $500bn in deposits and assets that left Credit Suisse over the past two years.
Credit Suisse reported net asset outflows of Sf39bn in the second quarter. However, UBS said the outflows had slowed and then reversed in June, with Credit Suisse reporting net deposit inflows of $18bn in the second quarter.
UBS CEO Sergio Ermotti has said he aims to get back the Credit Suisse assets.
“Winning back [the assets] ... is resetting our starting moment, and then from there on we are going to look at our combined growth aspirations,” Ermotti said at a conference in September.
Reuters
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