UBS investment banking fees drop 30% as transactions slow

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UBS’s investment banking fees fell 30% in the first quarter as the impact of Russia’s war on Ukraine dampened the deal boom that drove record fees last year.

The Swiss bank reported $550 million in investment banking fees in the first quarter, down nearly a third and slightly below analysts’ expectations as capital markets activity fell as high as present in 2022.

Its investment bank’s overall profit jumped 126% to $929 million, with sales and trading revenue hitting $2.4 billion, a 59% increase. However, in the first quarter of 2021, UBS recorded a loss of $774 million in its prime brokerage following the collapse of the family office Archegos Capital. Without it, trading revenue increased by 4%.

Equity markets activity has fallen 77% in Europe and 87% so far in 2022, according to data provider Dealogic, with IPO volumes falling 71% globally for reach $67 billion.

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The bank’s equity market fees fell 66% to $191 million in the first quarter, while most of its Wall Street rivals saw declines of around 80%. Its M&A dealmakers fared better, with revenue down 3% to $216 million. However, Goldman Sachs, JPMorgan, Morgan Stanley and Citi all posted gains in this unit during the first quarter.

Investment banks are coming off a banner year in 2021 when fees hit an all-time high of $130 billion. UBS’s global banking unit, which includes mergers and acquisitions and equity capital markets work, brought in $3.2 billion last year, up 32%, matching some Wall Street peers with a best result ever recorded.

However, the conflict between Ukraine and Russia has frozen many M&A deals, cutting short the deal boom that many M&A bankers had expected to continue in 2022.

“The first quarter was dominated by extraordinary geopolitical and macroeconomic events. In this environment, we remained focused on executing our strategic plans, serving our customers and managing risk,” Chief Executive Ralph Hamers said in a statement.

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UBS’s overall pretax profit was $2.7 billion, which beat analysts’ expectations of $2.4 billion.

Hamers added that 10,000 UBS employees are now part of its “new agile way of working”. In March, the Swiss bank said some of its US-based employees were eligible to work remotely for 100% of their time and that it was increasing the scope of its hybrid working program as part of its strategy to retention.

To contact the author of this story with comments or news, email Paul Clarke

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