We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UBS Group (UBS) Plans to Reduce Cost in Asset Management Unit
Read MoreHide Full Article
UBS Group AG (UBS - Free Report) plans to reduce hundreds of millions of dollars in expenditure in its asset management division, per Reuters. The bank is looking into cost-cutting opportunities for the particular segment as its profits are under pressure.
The asset management business of the bank needs to reduce its costs to be able to compete in the market and remain profitable. The operating profit before tax (underlying) for the asset management business declined 5.1% in 2023 from the prior year’s figure while operational expenses jumped 35.3% to $2.1 billion.
Also, in 2023, UBS' asset management business accounted for less than 7% of the bank's total revenues, whereas the wealth management division bought in more than half of UBS Group’s revenues.
On the fourth-quarter 2023 earnings call, UBS stated that the bank is "not immune to structural issues facing the asset management industry." Hence, it plans to reduce its underlying cost/income ratio to less than 70% by the end of 2026 from 80.2% in 2023.
The bank stated that achieving cost savings was a "critical component" of its strategy and it intends to expand the business while building on its strong partnership with global wealth management.
UBS also mentioned that wealth and asset management segments should collaborate closely, particularly for separately managed accounts, which are huge single accounts customized specifically for clients.
In other attempts to cut costs, according to the Reuters that cited SonntagsZeitung newspaper, UBS Group is planning to cut jobs in five separate waves, starting this June. Approximately 25% to 30% of former Credit Suisse staff could be laid off in the first wave of job cuts in June. The later waves are set to take place in the months of August, September, October and November. In total, 50-60% of former Credit Suisse employees are likely to be made redundant. This will help reduce costs by more than $13 billion by 2026.
Alternatively, to strengthen its revenues, UBS focuses on inorganic growth efforts. These efforts include its wealth management joint venture (JV) with Japan’s Sumitomo Mitsui Trust Holdings (UBS SuMi TRUST Wealth Management Co.), which was launched in August 2021. It established another investment banking JV with Banco do Brasil SA on Oct 1, 2020. These efforts are likely to keep supporting its financials going forward. Moving ahead, a solid balance sheet position gives UBS Group an opportunity to undertake beneficial strategic acquisitions.
Shares of UBS have jumped 41.5% on NYSE over the past year compared with the industry’s growth of 20.6%.
In March, Citigroup Inc. (C - Free Report) announced that it is set to lay off 286 New York City-based employees, according to three notices that the company filed with the State Labor Department.
C’s workforce reduction started before May 3. It comprises 239 employees in the primary banking unit, 44 in the global markets broker-dealer units and three in a technology unit, according to the Worker Adjustment and Retraining Notifications.
As part of its cost savings plan, Truist Financial (TFC - Free Report) closed approximately 4% of its branch network by March. This was first reported by American Banker.
Per the data from the Federal Deposit Insurance Corporation, TFC had 2,006 branches across 17 states and Washington, DC, as of Dec 29, 2023.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
UBS Group (UBS) Plans to Reduce Cost in Asset Management Unit
UBS Group AG (UBS - Free Report) plans to reduce hundreds of millions of dollars in expenditure in its asset management division, per Reuters. The bank is looking into cost-cutting opportunities for the particular segment as its profits are under pressure.
The asset management business of the bank needs to reduce its costs to be able to compete in the market and remain profitable. The operating profit before tax (underlying) for the asset management business declined 5.1% in 2023 from the prior year’s figure while operational expenses jumped 35.3% to $2.1 billion.
Also, in 2023, UBS' asset management business accounted for less than 7% of the bank's total revenues, whereas the wealth management division bought in more than half of UBS Group’s revenues.
On the fourth-quarter 2023 earnings call, UBS stated that the bank is "not immune to structural issues facing the asset management industry." Hence, it plans to reduce its underlying cost/income ratio to less than 70% by the end of 2026 from 80.2% in 2023.
The bank stated that achieving cost savings was a "critical component" of its strategy and it intends to expand the business while building on its strong partnership with global wealth management.
UBS also mentioned that wealth and asset management segments should collaborate closely, particularly for separately managed accounts, which are huge single accounts customized specifically for clients.
In other attempts to cut costs, according to the Reuters that cited SonntagsZeitung newspaper, UBS Group is planning to cut jobs in five separate waves, starting this June. Approximately 25% to 30% of former Credit Suisse staff could be laid off in the first wave of job cuts in June. The later waves are set to take place in the months of August, September, October and November. In total, 50-60% of former Credit Suisse employees are likely to be made redundant. This will help reduce costs by more than $13 billion by 2026.
Alternatively, to strengthen its revenues, UBS focuses on inorganic growth efforts. These efforts include its wealth management joint venture (JV) with Japan’s Sumitomo Mitsui Trust Holdings (UBS SuMi TRUST Wealth Management Co.), which was launched in August 2021. It established another investment banking JV with Banco do Brasil SA on Oct 1, 2020. These efforts are likely to keep supporting its financials going forward. Moving ahead, a solid balance sheet position gives UBS Group an opportunity to undertake beneficial strategic acquisitions.
Shares of UBS have jumped 41.5% on NYSE over the past year compared with the industry’s growth of 20.6%.
Image Source: Zacks Investment Research
Currently, UBS Group sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Banks Taking Similar Steps
In March, Citigroup Inc. (C - Free Report) announced that it is set to lay off 286 New York City-based employees, according to three notices that the company filed with the State Labor Department.
C’s workforce reduction started before May 3. It comprises 239 employees in the primary banking unit, 44 in the global markets broker-dealer units and three in a technology unit, according to the Worker Adjustment and Retraining Notifications.
As part of its cost savings plan, Truist Financial (TFC - Free Report) closed approximately 4% of its branch network by March. This was first reported by American Banker.
Per the data from the Federal Deposit Insurance Corporation, TFC had 2,006 branches across 17 states and Washington, DC, as of Dec 29, 2023.