November 28, 2023

Investment Banking

Let Your Investment Banking Do The Walking

UBS investment banking fees fall by 30% as deals slow down

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

The Swiss bank made $550m from investment banking fees in the first quarter, down by nearly a third and slightly below analyst expectations as equity capital markets activity has slumped so far in 2022.

Overall profit within its investment bank surged by 126% to $929m, as sales and trading revenue hit $2.4bn, an increase of 59%. However, in the first quarter of 2021, UBS booked a $774m loss within its prime broking from the collapse of family office Archegos Capital. Without this, trading revenue increased by 4%.

Equity capital markets activity has slumped by 77% in Europe and by 87% so far in 2022, according to data provider Dealogic, with initial public offering volumes tumbling by 71% globally to $67bn.

READ UBS equity banker Koby Englender departs amid deal slump

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

Investment banks are coming off a record year in 2021 when fees surged to an all-time high of $130bn. UBS’ global banking unit, which includes M&A and equity capital markets work, brought in $3.2bn last year, up by 32%, matching some Wall Street peers with a best-ever result.

However, the Ukraine-Russia conflict has led to many M&A deals being put on ice, cutting short the deal boom that many M&A bankers had predicted would continue in 2022.

“The first quarter was dominated by extraordinary geopolitical and macro events. Against this backdrop, we remained focused on executing our strategic plans, serving our clients and managing risk,” said chief executive Ralph Hamers in a statement.

READ UBS pays $2.2m to key bankers as bonus pool takes hit from Archegos

Overall pre-tax profit at UBS was $2.7bn, which was ahead of analyst expectations of $2.4bn.

Hamers added that 10,000 UBS employees were now part of its “new, agile way of working”. In March, the Swiss bank said that 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 programme as part of its retention strategy.

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