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UBS Group (UBS) Likely to Offer Clients Access to Cryptocurrency

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Many banks are contemplating taking the first step into the cryptocurrency markets after seeing an upsurge in interest from clients. UBS Group AG (UBS - Free Report) is one of the latest global banks to prod upon the option of providing digital currency investments after witnessing heightening interest from its clients on the same. This news was first reported by Bloomberg.

According to a source familiar with the matter, the Swiss giant is anxious about losing clients if it does not begin to provide investments related to the new asset class to its rich clients. With more than $3.5 trillion in assets under management, the bank is considering to offer digital investments that would represent a small portion of the client’s corpus, in order to be wary of the major fluctuations associated with the digital asset. The bank might hedge such volatility by using third-party investment vehicles, as mentioned by a source familiar with the matter.

UBS Group said in a statement, “Importantly, we are most interested in the technology which underpins digital assets, namely the distributed ledger technology.”

UBS Group’s chief executive officer, Ralph Hamers is also figuring out ways to trim expenses and digitize operations, including the high-touch business of delivering to the affluents. He wants to avail of artificial intelligence in selling more products to the wealthiest.

Hamers is planning to bring a change in the way UBS Group expends on technology projects to a more adaptable quarterly allocation from annual fixed funding. The bank spends $3.5 billion annually on technology to maintain and revamp its current infrastructure, and in innovating products for clients and new tools for employees.

Our Take

Such a move by UBS Group will likely further bolster the world’s most popular cryptocurrency asset’s prospects, at least on grounds that the bank, with a massive global footprint, is providing cryptocurrency access to its clients.

UBS Group’s move follows its peer Morgan Stanley’s (MS - Free Report) endeavor to start offering clients access to three bitcoin funds, as reported in March 2021. Earlier in February, The Bank of New York Mellon Corporation (BK - Free Report) became the first global custody bank to announce plans to form a new unit — Digital Assets — to help its institutional clients hold, transfer and issue digital assets. Earlier this month, it was reported that Citigroup (C - Free Report) too is considering taking its first steps in the cryptocurrency market thanks to the spike in client interest.

Shares of UBS Group have rallied 14.6% over the past six months, underperforming the 30% rally of the iindustry it belongs to.

 

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

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