UBS: The Bulge Bracket Remains a Distant Dream

Just commenting on the other post b/c this is very applicable. Also the original article post is from April 2024. Just want to note that before commenting anything b/c this is basically an article that is during integration times, UBS went through massive restructuring in the 1H 2024.

UBS Tech is a massive reason for their lower rankings than last year. Tech should take up 30-40% of a bank's wallet and was the big industry this year, it takes up 5-10% of UBS. This alongside a lack of energy business, one of the largest sectors this year, means UBS is going to do worse overall. Certain groups improved such as Industrials and LevFin they will get fine bonuses. Some groups dramatically dropped the ball like Tech and M&T which will reflect in their bonuses. 

Honestly impressive that it's even up 1% b/c that 2023 number includes some tech and M&T deal flow, primarily from the old CS franchisewhilst there is none this year outside of ECM+ LevFin-led things. 

Edit: Just want to note that basically, no competing bank has Tech underperformed as much as UBS has, which is super relevant given it was by far the largest sector seeing almost $ 100B increase in M&A volume. That's basically all the transaction volume of the financials industry combined for 2024. UBS's strong suit industries in Industrials and Financials saw significantly less increase in overall deal flow, despite UBS's market share increasing. HC also saw a slight UBS market share increase but the healthcare M&A sector actually shrunk this year from ~$265Bn to ~220Bn. UBS outside of tech was better than last year.

WSJ league tables for reference:

Check FactSet for additional data; but UBS Tech had a decrease in market share whilst other groups such as LevFin, HC, GIG had increased. The problem for UBS is that this year was so Tech dominated that the bank saw a nearly flat overall bottom-line with only low single-digit fee growth because the tech team did so much worse when the broader tech world did so much better.

To summarize: UBS performed roughly the same as last year with some improvements in some groups market share wise, but the tech group massively dragged it down in a year dominated by tech transactions. 

Easier way to understand this/different comment from last post to easier understand this:

The biggest sector this year by far was tech; the sector was so large that it was basically the combination of the next 2 largest sectors in M&A. Now in this sector, UBS massively declined but improved in most other sectors including the second and 4th largest sectors in M&A. The thing that is not reflected because WSJ does not give as much data as Factset does, but WSJ is the best that I can post since Factset is work-related content and I do not want to post from there.  Additionally, the 3rd and 5th largest sectors are sectors in which UBS does not do business. UBS has as mentioned improved market share in most of it's other sectors, it's pretty clearly tech that is a large part of the issue for UBS with a lot of the rest coming from a distinct lack of O&G deals since again UBS doesn't do O&G but O&G was a massive sector this year in the US for this specific year.

I am not out here defending UBS, merely explaining what the state of the bank is. This also means acknowledging what the source of the struggles are and which groups are doing well and which ones are not. 

Will UBS return to being around the 8-12 range in the Americas? Really depends on what the industry mix for deal flow looks like, but if less tech-heavy then most likely yes. If more tech heavy then most likely no. Alternatively, they could fire this tech team now and bring in new MDs or bring in even more tech MDs in the hope to finally make tech not be completely useless.