UBS attracted $28bn of new money as Credit Suisse crisis deepened

UBS’s wealth business attracted $28bn of new money in the first quarter, as the Swiss bank benefited from the deepening crisis at Credit Suisse that led to it taking over its stricken rival.

In first-quarter results released on Tuesday, UBS said that $7bn had flowed into its wealth arm after it agreed to rescue Credit Suisse in a deal pulled together by Swiss authorities last month.

UBS’s asset management arm also sucked in $14bn of inflows during the quarter, while net new fee generating assets grew by $8bn in its Swiss business. The snapshot from UBS comes a day after Credit Suisse revealed it suffered $69bn of outflows in the quarter.

“Our solid underlying performance and strong inflows this quarter demonstrate that we continue to be a source of stability for our clients during periods of significant uncertainty,” said UBS chief executive Sergio Ermotti, who returned last month to steer the integration of its rival.

While the inflows point to the benefits of its $3.25bn takeover of Credit Suisse, the deal also brings significant challenges. Since it was announced, UBS shares have risen 6 per cent, though analysts are wary of the costs and time it will take to integrate Credit Suisse.

The bank said on Monday that it expected to complete the acquisition in the second quarter.

“With this transaction, we expect to reinforce our position as a leading and truly global wealth manager with strategic scale and complementary capabilities in the most attractive growth markets,” added Ermotti.

Its acquisition of Credit Suisse dominated UBS’s first quarter, when it made $1bn of pre-tax profit, down 52 per cent on the same period a year ago and below analysts’ estimates. The results were hit after UBS increased its provisions by $665mn for litigation related to mortgage-backed securities.

Ermotti said the bank was in advanced discussions with the US Department of Justice over the matter, which dates back 15 years.

The bank repurchased $1.3bn of shares in the quarter, though the buyback programme was temporarily suspended after the announcement of the Credit Suisse deal.

UBS said geopolitical tensions between China and US, along with the Russia-Ukraine war, had caused uncertainty in asset valuations and the economic outlook, prompting many clients to diversify their cash holdings by investing in money market funds.