Monday 18, June 2018 by Jessica Combes

Moody’s raises UBS wealth management credit rating


Credit Suisse’s long-term issuer rating stands at Baa2 with a stable outlook

UBS Group AG’s credit rating was raised by Moody’s Investors Service, which said the restructured investment bank and wealth management business should help the lender weather a market downturn.

The Zurich-based bank’s long-term issuer rating was raised one level to Aa3, Moody’s said Monday in a statement. It raised the outlook on the long-term deposit and senior unsecured ratings to stable from under review. Credit Suisse’s long-term issuer rating stands at Baa2 with a stable outlook.

UBS scaled back its investment bank after the financial crisis to reduce risk and focus on its large wealth management business, which provides more stable earnings. The lender has cut the amount of capital allocated to the investment bank, focusing on areas such as equities, foreign exchange and advisory services. The higher rating contrasts with a downgrade of German competitor Deutsche Bank AG, which was cut by S&P Global Ratings less than three weeks ago as it struggles to turn around the securities unit.

“UBS management actions have resulted in a less complex investment banking operation, more aligned with its wealth and asset management businesses and more focused on less capital-intensive and flow-based capital markets segments,” Moody’s said. The firm had put the bank’s ratings under review for a potential upgrade on 5 April.

More recently, UBS merged its two wealth management units in the Americas and the rest of the world. Analysts at JPMorgan Chase & Co. have said that UBS can do more on costs and is trailing Credit Suisse, which has shown greater momentum.

Savings from the merger of UBS’s wealth management units could be a potential boost to profits which has not yet been factored in, while cost savings at Credit Suisse are largely reflected in estimates, they said.

Features & Analyses

Wealth Management Why is there no inflation?

  Mark Burgess, Deputy Global CIO & CIO, EMEA, Columbia Threadneedle Investments, writes about one of the biggest questions… read more