Given the bad deal flow and recent regulatory requirements, heard some of my MDs joking that UBS will end up divesting its banking division in the Americas. Maybe worth it to spin it out like a CS First Boston model
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No, they need to cross-sell services to WM clients. UBS is a WM business that does other things, mostly to cross-sell to their multi-trillion AUM WM base. IB is one of the most logical things to cross-sell to them and so it makes no sense to get rid of the division or spin it out.
This. It makes zero sense to get rid of their IBD. Eventually that business will pick up its activity
They can just cross sell and keep the referral fee. Much easier
The whole cross sell with WM is largely a sham. Very little cross pollination despite efforts to do so. In fact a lot of things sourced from WM end up wasting banker time.
Most WM clients are either not rich enough to be the source of large or mid cap deals. And the few that are usually have assets at many banks and dont feel a particular allegiance to UBS.
UBS generates most of its IB revenue from sponsors - WM plays almost no role in that.
Just because it wastes your time from the IB side doesn't mean it's bad for the bank. UBS ultimately is focused on WM, and they want to keep WM clients. Making the ones wealthy enough to buy or sell a mid-cap business some time with bankers to talk through things/feel important helps the bank maintain WM clients. Even if not cross-selling directly, it's at least client service.
Also, WM currently doesn't cross-sell much directly until you realize a lot of the large sponsor PE partners are UBS WM clients, as are many of the founders/executives of their portfolio companies. I have been attending the senior meetings with sponsors, and many of those who use UBS fairly often are, in fact, UBS WM clients. How much it helps or not is more questionable, but it's 100% a thing, even if not directly sourced from WM (direct sourcing has increasingly occurred in the past year or two as UBS sets up cross-pollination efforts).
Regardless, the view at the senior level is that this is something that the leadership wants to pursue and has set up a one-UBS-type team with super senior people to lead this effort. Again, time will tell how well that goes, but it is absolutely a huge focus and huge investment they are doing.
A sale could definitely happen. If any US financial firm is interested in making a play to be a major shop, UBS is the clear choice.
None of the american BBs are for sale, Barclays and DB are doing fairly well, and boutiques that are advisory only are likely too risky for most of these types of buyers.
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