Credit Suisse Group will probably lose about a fifth of the assets in its wealth management business, or roughly 110 billion francs ($123 billion), following its takeover by UBS Group, analysts at Citigroup estimate.
The outflows could rise to about a third, or 162 billion francs, in a worst-case scenario in which cultural differences between both firms lead to increased attrition or rivals successfully lure bankers and their clients, the analysts led by Nicholas Herman wrote in a note published Tuesday.
The uncertainty created by UBS's takeover has "created a potential opportunity for rivals to poach advisors and assets," they said. They estimate that this will contribute to $5.4 billion in lost annual revenue at the combined entity as a result of the merger.
The potential loss of clients and their money is emerging as a key challenge for UBS after it agreed last month to acquire its local rival in an emergency, government-backed rescue. UBS Chairman Colm Kelleher has said it will likely take months to close the deal and as much as four years to complete the integration. The bank is already working on retention packages to keep top talent, Bloomberg News has
Julius Baer Group is set to benefit the most from the private banking money that will leave the combined UBS-Credit Suisse entity, the Citi analysts predicted. The Zurich-based lender will capture at least 10 billion francs, they said.
Baer is now "back in hiring mode" and it's expected to recruit 200 new staff this year, the Citi team wrote.
Citi also said that UBS is unlikely to resume share buybacks before 2026, after it announced a suspension when it agreed to buy Credit Suisse. Earlier Tuesday, UBS said it won approval to use some shares that it had repurchased over the past year to finance the acquisition of Credit Suisse.
Credit Suisse had 541 billion francs in assets under management at the wealth business at the end of last year. The firm is scheduled to report first-quarter results on Monday.
