UBS Can Be Morgan Stanley, Says Activist
An activist investor has bold ambitions for UBS, arguing that the Swiss bank could soon resemble Wall Street titan Morgan Stanley.
On Tuesday, Cevian Capital said it paid $1.3 billion for a 1.3% stake in UBS. The move comes after UBS was forced to acquire rival Credit Suisse in the wake of banking turmoil last spring. UBS stock has surged more than 60% this year, with essentially all of that gain after the acquisition closed in June. Cevian sees more upside.
“Strengthened by the acquisition, UBS is the largest global wealth manager with unique market positions and financial strength,” Cevian co-founder Lars Förberg said on Tuesday. “If the valuation gap to Morgan Stanley at two times price to tangible book is closed, the UBS share is worth CHF50 ($58.10).” UBS stock, now at about $31, trades at 1.2 times tangible book value.
UBS declined to comment on Cevian’s stake. The stock rose 5% on Tuesday on the news.
It is easy to see why Morgan Stanley would be a model for UBS. Morgan Stanley struggled through the 2008-09 financial crisis, but it smartly pivoted afterward to focus on wealth management rather than on trading and investment banking.
As of the third quarter, UBS derived 56% of its revenue from wealth and asset management, compared with 52% at Morgan Stanley. But UBS has a valuation more in line with European peers than U.S. banks, despite its hefty footprint in the U.S.
While UBS has the pieces in play to be considered a rival to Morgan Stanley, putting them together will be slow and complicated. Cevian may have to wait.