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UBS Share Price Jumps On Credit Suisse Merger Rumour, Central Bank Action
Unsourced market rumours that Swiss banking giants UBS and Credit Suisse could merge, coupled with action by the Swiss central bank to pump liquidity into the market, helped boost UBS shares today.
However, sources familiar with the matter told WealthBriefing there is little strategic sense in the banks merging as there would be considerable duplication of functions.
But a well-known Swiss wealth management consultant told WealthBriefing that in his opinion, UBS had not many alternatives.
UBS shares were up by 12 per cent at 1500 BST. Credit Suisse’s share price was up 3.8 per cent.
A spokesman for UBS declined to comment. Credit Suisse did not immediately return calls from WealthBriefing on the matter.
Earlier today, a Swiss government minister was quoted as saying that the Swiss administration was confident that UBS would ride out the financial storm. The bank has suffered more than $43 billion in credit write-downs.
If a merger went ahead, it would reinforce the position of the world’s largest wealth management player. UBS’s total invested assets stood at SFr2.763 trillion at the end of June this year, of which SFr2.006 trillion was attributable to global wealth management and business banking. Credit Suisse’s private banking arm, meanwhile, oversaw SFr995.4 billion of assets under management as of the end of 2007.
A source told WealthBriefing that a number of banks besides UBS had seen their shares rise on Thursday, which weakened the notion that a merger rumour had contributed greatly to the move in UBS’s share price. For example, Deutsche Bank’s shares were up 1.4 per cent. JPMorgan was up 1.6 per cent.
UBS stock has lost more than 70 per cent of its value since the beginning of the year.
Earlier this month, media reports said UBS will have to write down another $5 billion on its risky investments in the second half of the year.
UBS has moved to split apart its wealth, asset management and investment banking arms and has announced a number of senior management changes. Credit Suisse, meanwhile, has so far been relatively unscathed by the credit crunch.
