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UBS Group Enters Joint Venture With a Japanese Trust Bank

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With a view of strengthening position in Japan, UBS Group AG (UBS - Free Report) has entered into a joint venture with Japan’s largest trust banking group, Sumitomo Mitsui Trust Holdings (“SMTH”). Notably, UBS will be the majority owner of the venture. However, financial details of the deal remain undisclosed.

SMTH offers a range of services including banking, real estate, asset and wealth advisory to individuals and corporate clients. As of Mar 31, 2018, the company had ¥285 trillion in assets under custody.

The new venture will combine UBS' global capabilities in wealth management with SMTH’s affluent client base in Japan. The companies expect to begin cross-referrals for each other’s products before 2019-end. These activities are likely to be incorporated into a new co-branded joint venture company by early 2021.

Prior to this deal, UBS had been offering securities products, foreign exchange and other banking products, along with a whole range of global financing and advisory services to Japanese clients through offices in Tokyo, Osaka, and Nagoya.

Notably, through this venture, UBS will be able to further expand operations in Japan as it will have access to SMTH’s pool of high net worth and ultra-high net worth clients in the country. Also, UBS’ wealth management clients will be able to avail a full range of Japanese real estate and trust services.

UBS' Japan Country Head Zenji Nakamura said, "This transaction is a boost for our overall business in Japan, as it also brings reputational benefits to our investment banking and asset management units which fall outside this alliance. It is a new milestone that sends a clear message of long-term commitment to the Japanese market."

UBS’ strategic alliance to improve customer base and efforts to tap into opportunistic growth areas bode well. The company has been settling several lawsuits and regulatory probes, in a bid to focus on strengthening core operations. Also, it is taking initiatives to control costs, which will aid bottom-line growth.

The stock has lost 1.4% over the past three months compared with 1.1% decline of the industry it belongs to.

 

 

Currently, UBS Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

Other top-ranked stocks in the same space include Macro Bank Inc. (BMA - Free Report) , Banco Latinoamericano de Comercio Exterior, S.A. (BLX - Free Report) and HSBC Holdings plc (HSBC - Free Report) .

Zacks #1 Ranked Macro Bank’s earnings estimates for 2019 have moved up 2.7% in the past 30 days. Its share price has risen 35.2% in the past six months.

Zacks #1 Ranked Banco Latinoamericano’s shares have gained 18.6% in six months’ time. Its earnings estimates for 2019 have moved up 4.8% in the past 30 days.

The Zacks Consensus Estimate for the current year for HSBC Holdings, carrying a Zacks Rank #2, has remained stable in the past 30 days. The company’s share price has jumped 1.9% in the past six months.

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