Article: UBS Faces Tough Questions as Market Share Plummets in 3Q 2024
- According to LSEG, UBS experienced a 14% drop in total investment banking fees for the first nine months of 2024, underperforming in a market that saw a 10% overall increase
- UBS's global investment banking fees now rank 12th and behind Wells Fargo, Deutsche Bank, BNP Paribas, Jefferies, and RBC Capital Markets
- In the EMEA region, UBS's investment banking fees now rank 13th and have fallen behind those of Morgan Stanley, Deutsche Bank, HSBC, Credit Agricole, Société Générale, and Santander
- UBS's investment banking fees in the Americas now rank 15th and trail TD Securities, BMO Capital Markets, Deutsche Bank, Evercore, and Centerview Partners
UBS Faces Mounting Challenges in 2024 as Investment Banking Fees Decline
UBS is grappling with significant setbacks in 2024, facing sharp declines in its global investment banking (IB) fees. According to LSEG’s Global Investment Banking Review, UBS saw a 14% drop in fees during the first nine months of the year compared to 2023, against an overall 10% market increase, which lifted global IB fees to $85.3 billion. The firm's global market share slipped from 2.3% in YTD 2023 to 1.8% in YTD 2024, reflecting a difficult year as the bank continues to lose ground to competitors, particularly in the Americas and Europe.
Global Market Losses and Competitor Gains
UBS's underperformance highlights a broader trend, with multiple competitors overtaking the Swiss bank in global rankings. Wells Fargo, Deutsche Bank, BNP Paribas, Jefferies, and RBC Capital Markets have all surpassed UBS in terms of total global IB fee market share. This shift signals a marked change in the competitive landscape, where UBS once had a stronger foothold among top-tier investment banks.
The decline has been particularly pronounced in the Americas, where UBS now lags behind TD Securities, BMO Capital Markets, Deutsche Bank, Evercore, and Centerview Partners in YTD 2024 fees. In the Americas, which accounted for 54% of global IB fees in the first nine months of 2024, UBS's market share dropped from 2.4% to 1.7%, dealing a heavy blow to its performance in the region.
JP Morgan, Morgan Stanley, and Citi, meanwhile, capitalized on this performance, each seeing market share increases of over 0.5% in 2024, while UBS has struggled to defend its position in the fiercely competitive North American market.
In Europe, the Middle East & Africa (EMEA), UBS has also faced steep declines, losing market share to rivals including Morgan Stanley, Deutsche Bank, HSBC, Credit Agricole, Société Générale, and Santander. Deutsche Bank, which saw a 43% rise in its European fee pool, has overtaken UBS, capturing a growing share of the region's debt and equity markets. UBS saw its EMEA fees fall by 8% even as the region's overall fee pool grew by 13%, underscoring the bank’s difficulties in maintaining competitiveness in Europe amid regulatory shifts and market volatility.
Barclays Gains Ground Despite Departures
One of the more surprising developments in 2024 has been Barclays' continued growth in market share, despite the departure of senior bankers, including Marco Valla, who left Barclays to join UBS as Head of Investment Banking. Barclays has maintained momentum across both the Americas and Europe, growing its IB fee wallet share despite internal upheaval. The bank's strong position in equity, bond, and loan markets has enabled it to capture a significant gain in the fee pool.
Barclays' performance has been especially notable in Europe, where it ranks among the top five banks by market share, managing to fend off competition from the likes of Citi and Morgan Stanley.
Executive Commentary: UBS’s Strategic Repositioning
Amid these challenges, UBS leadership remains focused on long-term strategic objectives. In a recent interview, CEO Sergio Ermotti acknowledged the firm’s difficulties, particularly in the Americas, where it faces stiff competition. “We all see that the second – the third quarter is a little bit more challenging” Ermotti said. Regarding the bank’s broader strategy, he added, “Of course, when I look at the current market conditions, how these mandates translate into transactions that gets closed, it's another matter.”
Ermotti further addressed the bank's unique position in the U.S. market, stating, “I always say it's extremely challenging and, if not, impossible to close the gap with our competitors in the US because we have a completely different feeder and business model in the US than many of our peers.”
Marco Valla, who joined UBS from Barclays in 2023 as Head of Investment Banking, has also outlined his vision for the future. In a January 2024 interview, he proclaimed a new chapter for UBS's Global Banking division: ”We have the resources in place now and the talent in place to make sure we go after this americas market in a meaningful way."
Valla expressed confidence in UBS’s long-term strategies, particularly in key sectors. "If you look at our headcount, for example, in the Americas its up approximately 65% from legacy UBS a lot of that growth has been in key areas of focus for us like Tech coverage and Healthcare coverage.” Valla said. He also highlighted the importance of the bank’s integration with Credit Suisse, stating, "We've also taken on a very meaningful loanbook from Credit Suisse."
However, these initiatives have yet to significantly improve UBS's bottom line. Americas banking revenue is down 14% this year, and global syndicated loans have fallen by 19%, according to LSEG’s latest report.
See latest league table by region and product:
https://www.lseg.com/en/data-analytics/products/d…
Listen to a January 2024 interview with Marco Valla, UBS Co-Head of Banking:
Solid article
Good read thanks
"The decline has been particularly pronounced in the Americas, where UBS now lags behind TD Securities, BMO Capital Markets, Deutsche Bank, Evercore, and Centerview Partners in YTD 2024 fees. In the Americas, which accounted for 54% of global IB fees in the first nine months of 2024, UBS's market share dropped from 2.4% to 1.7%, dealing a heavy blow to its performance in the region."
brutal. I cant take another year of bad bonuses
But why?
Looking at the linked report with several theories:
1. UBS has struggled to establish dominance in any particular segment or product that could serve as a cornerstone for the franchise. The top 10 investment banking players have consolidated IB fee market share, collectively gaining 4.5% over the past year. UBS now trails outside the top five across all major products and sectors, outside of top 9 in all major geographies. Previously in 2023 UBS FIG was #5 (9M 2023), UBS Retail #4 (9M 2023), and in CS was #1 in ECM, #1 in IPOs (1H 22)
2. While UBS has heavily invested in and focused on Tech and Healthcare, the strategy seems centered on hiring junior Managing Directors. These hires, while cost-effective, still require significant mentorship to succeed. By contrast, seasoned rainmakers are not only scarce but tend to stay put if their performance is strong, raising questions about UBS’s ability to attract top-tier talent. If these junior MDs were exceptional, they likely wouldn’t be making lateral moves in the first place. The investment bank has never been a truly funded priority relative to wealth at a massive scale.
3. The firm’s ECM franchise remains underdeveloped compared to its peers, all of whom have seen significant growth this year. DCM is performed at a relativly smaller scale and is outside the top 20.
4. Lacking strong relationships with the top fee payers. For the top 25 fee payers, only Vodafone has UBS as their top bank.
5. Credit Suisse’s Sponsors group seems to have vanished entirely in the aftermath of the UBS merger. In the first nine months of 2021, Credit Suisse held a 5.6% wallet share in sponsor fees, while UBS trailed at 2.2%. By 2024, the combined entity’s wallet share has risen slightly to 3.2%, higher than UBS’s standalone figure but reflecting a significant erosion of Credit Suisse’s once-strong position in the sponsor space.
Updates on our progress?
Concerning development
Maybe the Swiss government can step in again and hold UBS MDs’ hands during bake offs
We will see if this verifies once earnings are announced
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