According to sources familiar with the bank’s operations, UBS (UBSG.S) is attempting to draw clients by offering above-market rates on deposits as it looks to increase inflows after acquiring struggling competitor Credit Suisse.
The sources who wanted to remain anonymous since the topic is confidential, clients who deposit their money with Credit Suisse, now a division of UBS, earn roughly 1.8% on as much as 50,000 Swiss francs ($54,000) kept for three months.
Similar deposits with a minimum investment of 100,000 francs yield 1.34% interest at Zuercher Kantonalbank and 1.2% interest at Raiffeisen, according to representatives for the two banks.
In response to a request for comment, Credit Suisse stated, “As is customary in the market, there may be specifically tailored offers that can also depend on an overall client relationship.” Regarding three-month deposit rates, UBS declined to comment. The bank is running a campaign with a fixed rate of 1.75% for a one-year lockup.
Due to a customer money flight that put Credit Suisse in danger of failing, two worldwide systemically significant banks merged for the first time. UBS, which manages $5.5 trillion in assets for affluent customers since taking over its erstwhile rival, must win back the clients’ cash and faith in Switzerland. Additionally, the bank needs to try to keep customers who would have had money in both banks and may now be looking to diversify their risk.
In a report published on Monday, JPMorgan analyst Kian Abouhossein flagged outflows from Credit Suisse’s wealth management division as a significant concern for UBS.
According to the analyst, Credit Suisse may be using higher deposit rates to control cash withdrawals, which has hampered the bank’s capacity to increase income.
Yet, according to Abouhossein, there is a chance that UBS may be able to recoup some of the over $500 billion in deposits and other assets that have left Credit Suisse during the past two years. In the second quarter, Credit Suisse recorded net asset outflows of 39 billion francs. While Credit Suisse reported net deposit inflows of $18 billion in the second quarter, UBS claimed that the withdrawals had slowed and reversed in June.
Sergio Ermotti, Chief Executive Officer of UBS, has stated his intention to reclaim the assets of Credit Suisse.
Ermotti stated at a conference in September that “winning back is winning back and is resetting our starting moment, and from there on, we are going to look at our combined growth aspirations.”
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