UBS is making a bold move to attract customers by offering higher-than-average interest rates on deposits. This strategy comes after UBS took over struggling bank Credit Suisse and aims to boost inflows.
Clients who deposit their cash at Credit Suisse, now a part of UBS, can earn around 1.8% on 50,000 Swiss francs ($54,000) or more held for three months. Other banks like Zuercher Kantonalbank and Raiffeisen offer lower rates of 1.34% and 1.2% respectively.
Credit Suisse stated, “There may be specifically tailored offers that can also depend on an overall client relationship.” UBS, on the other hand, declined to comment on three-month deposit rates but does offer a fixed rate of 1.75% for a one-year lockup as part of a current campaign.
The merger of Credit Suisse and UBS was prompted by client fund outflows that threatened the collapse of Credit Suisse. Now, UBS strives to regain clients’ trust and funds, managing $5.5 trillion in assets for wealthy clients.
JPMorgan analyst Kian Abouhossein highlighted the importance of limiting outflows from Credit Suisse’s wealth management franchise as a key risk for UBS. Higher deposit rates could potentially help in this regard but have been impacting Credit Suisse’s revenue.
However, Abouhossein believes that UBS has the potential to reclaim a portion of the almost $500 billion in deposits and assets that left Credit Suisse in the past two years.
In the second quarter, Credit Suisse reported net asset outflows of 39 billion francs. Nevertheless, UBS stated that outflows have slowed down and even reversed in June, with Credit Suisse reporting net deposit inflows of $18 billion.
UBS’s CEO, Sergio Ermotti, expressed his determination to regain the assets from Credit Suisse. “Winning back is winning back and is resetting our starting moment, and then from there on we are going to look at our combined growth aspirations,” Ermotti said.
(Source: Noele Illien | Stefania Spezzati | Oliver Hirt | Elisa Martinuzzi | Mark Potter | Reuters)
