UBS Group AG Chief Executive Officer Sergio Ermotti said he’s seeing “good momentum” this quarter in regaining funds that clients pulled from Credit Suisse before the takeover, even if recovering all of the roughly $200 billion that clients pulled isn’t likely.
(Bloomberg) — UBS Group AG Chief Executive Officer Sergio Ermotti said he’s seeing “good momentum” this quarter in regaining funds that clients pulled from Credit Suisse before the takeover, even if recovering all of the roughly $200 billion that clients pulled isn’t likely.
“It’s going to take a few quarters to regain a good chunk,” Ermotti said in an interview with Bloomberg Television in Beijing on Monday. “Getting back everything is going to be almost impossible, but our aim is to recapture as much as possible.”
UBS shares have gained by more than a third this year as investors increasingly back the bank’s plan to stabilize Credit Suisse and integrate its profitable businesses. Speaking on his first Asia trip since returning as UBS CEO, Ermotti said he was seeing positive client inflows across the globe.
It’s “fair to say investors are more constructive than they’ve been recently,” he said. It’s “very encouraging to see that our clients are responding to our actions.”
UBS shares rose after the interview aired, trading at 23.16 Swiss francs ($25.461) at 9:37 a.m. in Zurich.
Ermotti reiterated the firm’s commitment to China as he visited Beijing while acknowledging the geopolitical situation has changed. UBS has “very limited” direct exposure to China real estate since the bank is mainly in the country to help people manage their wealth. He said they are still evaluating options on what to do about the Credit Suisse securities venture they acquired in the merger.
Read More: UBS to Cut Hundreds of Wealth Jobs in Asia as Activity Slows
UBS’s key global wealth-management business recorded $16 billion in client inflows for the second quarter, which was the highest figure for the period in over a decade. Flows of clients funds at Credit Suisse’s wealth unit turned positive in June.
UBS took over former rival Credit Suisse earlier this year after the smaller bank almost collapsed during a bank run. Integrating the business will take several years, UBS has said. The acquisition of Credit Suisse increased UBS’s workforce by 45,000 to just under 120,000.
Natural Attrition
Ermotti said that he was able to take advantage of “natural attrition” to resize the business and that the bank is working to mitigate the social cost of job losses.
UBS has signaled it plans to cut about 3,000 jobs in its home markets. UBS is also cutting hundreds of wealth management jobs in Asia as activity slows down. The bank, which has reduced some overlapping roles in the past months, will continue to do so with further cuts expected through November, Bloomberg News previously reported.
Globally about 8,000 Credit Suisse staff have already left since the beginning of the year, Ermotti previously said. That was partly the result of cost reductions initiated by Credit Suisse before the merger, with UBS since accelerating those measures.
Last month UBS signaled that it is closing two-thirds of Credit Suisse’s investment bank, including almost the entirety of the trading operations, as part of its plans to exit businesses that don’t fit with its existing strategy. Assets related to those businesses are being moved to a “non-core” unit for wind down.
The unit had approximately $55 billion of risk-weighted assets at the end of June. Some $8 billion in positions had been exited during the last quarter.
“The perimeter around non-core asset is being finalized, we are doing it as we speak,” Ermotti said. “We will continue to execute on the wind down of this part of the balance sheet while, most importantly, addressing the cost base that is there to sustain those assets.”
–With assistance from Jonas Bergman, Adrian Wong, Alessandro Speciale and John Liu.
(Updates with shares in fifth paragraph)
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