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UBS Group Contemplates Restructuring Asset Management Unit

Zacks Equity Research

Continuing the revamping of various units to boost performance and trim costs, this time UBS Group’s UBS asset management division might sell off UBS Fondcenter, the fund platform. The new unit head — Suni Harford — plans to sale the platform due to its underperformance.

Per the source, the Swiss Bank is likely to earn around 500 million Swiss francs ($506 million) through the sale of UBS Fondcenter. Notably, the fund platform is accessible to more than 65,000 funds from hundreds of mutual funds, ETFs and alternative investment fund providers. UBS Group’s spokeswoman has refrained from commenting on the matter.

Particularly, bank-owned asset managers are under tremendous pressure from new regulations, including MIFID II and investors’ shift toward passive investing. The Swiss Bank’s asset management unit was unable to meet the profitability target several times under its former head Ulrich Koerner. Therefore, for the past year, UBS Group has been looking for good options for its asset management business, which also included exploring a merger with Deutsche Bank AG’s DB DWS.

The Fondcenter sale is expected to enhance profitability of the bank’s asset management unit. Among others, Credit Suisse Group AG CS, earlier this year, signed a deal and combined its fund platform InvestLab with private equity-backed Allfunds.

Our Take

UBS Group’s financials continue to be affected by involvement in several lawsuits, regulatory probes and low interest rates in domestic economy. Nonetheless, its strategic alliance to boost the customer base and efforts to tap into opportunistic growth areas bode well. These apart, restructuring moves will likely aid growth in financials.

Notably, in order to restructure the investment banking division also, the company is combining its trading operations, and making changes in senior management. It has also begun slashing jobs to trim costs.

The stock has lost 3.1%, so far this year, compared with 23% growth registered by 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.

Among others, KB Financial Group Inc KB has been witnessing upward estimate revisions for the past 60 days, with the company’s shares appreciating nearly 3.1% on the NYSE, in six months’ time. It sports a Zacks Rank of 1, at present.

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UBS Group AG (UBS) : Free Stock Analysis Report
 
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