Investors pulled €2.6bn in (£2.2bn) net outflows from BNP Paribas in the month, the largest of any asset manager in absolute terms. The French asset manager leaked €6.3bn in the year as a whole.

iShares, known for its passive offerings, saw investors pull €1bn from its funds in December. The firm was hit with modest outflows of €26m in 2023.

Overall, Italian firm Eurizon was the asset manager with the largest outflows in 2023 at €17bn, followed by Credit Suisse at €14bn. BlackRock attracted the most cash, with inflows of €68.4bn.

European-domiciled funds as a whole attracted a net €49bn in 2023. Money markets pulled in €196bn, the second-best year on record for the asset class.

Passive strategies continued to capture the attention of investors, with a positive organic growth rate of 8.6% over the year. In contrast, active managers had a negative 2.1% organic growth rate, when excluding money market strategies.

Fixed income funds also enjoyed a positive year, with 4163bn flowing into the asset class. Meanwhile, equity funds attracted €17bn, though this was largely owing to a strong Q1.

In terms of individual funds, the £2.8bn passive UBS (CH) Fund Solutions MSCI USA SF Index fund received the most monthly inflows at £1.8bn.

The Swiss asset manager enjoyed a strong month for flows, with four funds among the top 10 for inflows.

At the other end of the scale, investors pulled £1.6bn from the UBS Multi Manager Access US Equities, leaving its net assets at £451m.

This article was written for our sister title Portfolio Adviser

This comes months after the deal was first announced.

Credit Suisse Group has been merged into UBS Group and the combined entity will operate as a consolidated banking group.

12 June marks the last trading day of Credit Suisse Group shares on the SIX Swiss Exchange. Credit Suisse Group will no longer be traded on the New York Stock Exchange. As announced on 19 March 2023, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held.

As previously announced, UBS will operate the following governance model pending further integration:

• UBS Group will manage two separate parent banks – UBS and Credit Suisse. Each institution will continue to have its own subsidiaries and branches, serve its clients and deal with counterparties.
• The board of directors and group executive board of UBS Group will hold overall responsibility for the consolidated group.

In May 2023, UBS announced its post-merger management team.

‘Stronger’

Colm Kelleher, UBS Group chairman, said: “I‘m pleased that we’ve successfully closed this crucial transaction in less than three months, bringing together two global systemically important banks for the first time.

“We are now one Swiss global firm and, together, we are stronger. As we start to operate the consolidated banking group, we’ll continue to be guided by the best interests of all our stakeholders, including investors. Our top priority remains the same: to serve our clients with excellence.”

Sergio Ermotti, chief executive of UBS Group, added: “Today we welcome our new colleagues from Credit Suisse to UBS. Instead of competing, we’ll now unite as we embark on the next chapter of our joint journey. Together, we’ll present our clients an enhanced global offering, broader geographic reach and access to even greater expertise. We’ll create a bank that our clients, employees, investors and Switzerland can be proud of.”

Struggles of Credit Suisse

The merger comes after Credit Suisse agreed a deal for $54bn of extra funding with Switzerland’s central bank.

Credit Suisse saw its shares plunge over 30% on 15 March as insolvency rumours spread.

The bank warned it had identified ‘weakness’ in its balance sheet and has put out a series of poor results updates of late. This all followed huge losses in 2021 stemming from its relationship with failed American hedge fund Archegos.

The fears over it collapsing prompted a big sell-off across the market, with banks hit the hardest.

In November 2021, Swiss banking giant Credit Suisse announced it was combining its wealth management operations into a single global division as part of its plan to revamp its business structure and divert away from investment banking.

The group was reorganised into four divisions – wealth management, investment bank, Swiss bank and asset management – and four regions – Switzerland; Europe, Middle East and Africa (Emea); Asia Pacific (Apac) and Americas.

The bank said at the time it would be “deploying” CHF3bn of capital to its wealth management division, as well as increase the ratio of capital allocated to the wealth, Swiss bank and asset management operations compared to its investment banking arm.

Unfortunately, the bank’s change in strategy failed to take effect and has left Credit Suisse needing to merge with UBS.

The rapid timeline may surprise observers given the complexity and controversy around the deal, which was hastily agreed over a fraught weekend in March.

The banks, which are also among the world’s largest wealth managers, agreed to become one under the influence of the Swiss government amid fears of Credit Suisse’s collapse and the potential for contagion in the financial system.

The new entity will have around $1.6trn (£1.29trn, €1.5trn) in assets under management.

Despite the bullish statement from UBS, doubts over the deal still linger. Not least, an ongoing legal dispute stemming from the wipeout of the Credit Suisse contingent convertible bonds that occurred as part of the deal.

There is also a legal question mark over the Swiss parliament being sidelined by the government as it pushed the agreement through.

Even if the legal issues are settled and the deal is completed by 12 June that will be far from the end of the story, with the integration of the two vast businesses expected to take up to four years.

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Bidzina Ivanishvili sued the bank’s trust arm for damages and lost income that he claims he would have made over the years if his money had been safely invested. He was a former client of wealth manager Patrice Lescaudron, who admitted hiding losses of CHF143m (£128m, €145m, $154m). In 2020, Lescaudron took his own life.

Ivanishvili, a tycoon and former prime minister of Georgia, was the victim of a scheme Lescaudron ran to cover growing losses among other client portfolios.

It is not the first time that Credit Suisse has made headlines in the wake of Lescaudron’s actions. In March 2022, the bank said it was expecting a Bermuda court to hand down a $500m penalty to its life insurance subsidiary Credit Suisse Life Bermuda.

Judgement

According to a judgment posted on 26 May, Credit Suisse Trust breached its duty to the plaintiffs in failing to safeguard the trust assets.

Judge Patricia Bergin said: “The plaintiffs have established that the defendant breached its duty to the plaintiffs to safeguard the trust assets as at 30 March 2008.

“The loss suffered by the plaintiffs is the difference between what would have been achieved if the whole portfolio had been removed and managed by a competent, professional trustee and the trust assets were not affected by fraud, and what was actually achieved.”

She added that Credit Suisse is liable to compensate the former Georgian prime minister’s family for their losses from 30 March 2008 to the date of the judgment. As a result of the settlement, the sum should be reduced by [just over $79m].

“Further, the parties will ensure that any sum recovered in the Bermuda Proceedings will be adjusted so as to ensure there is no double recovery,” Bergin added. “If the parties are unable to reach agreement on costs and/or interest, they should file an agreed timetable for submissions on costs and/or interest by no later than 30 June 2023.

“If the parties agree, the question of costs and/or interest, will be dealt with on the papers. If the parties wish to have an oral hearing in respect of costs and/or interest, they should deal with this in the timetable.”

A spokesperson for Credit Suisse told International Adviser: “The Singapore International Commercial Court delivered its judgment on May 26 in relation to trust services provided by Credit Suisse Group’s Singapore subsidiary, Credit Suisse Trust Limited.

“The judgment published today is wrong and poses very significant legal issues. Credit Suisse Trust Limited intends to vigorously pursue an appeal.”

Sale

This comes several months after international wealth management giant UBS agreed a deal to acquire struggling Swiss banking group Credit Suisse for a total consideration of CHF3bn.

The deal is expected to create a global wealth management business with more than $5trn (£4.1trn, €4.7trn) in total invested assets and sustainable value opportunities.

UBS said it anticipates that the deal will complete in the next few weeks. At this time, Credit Suisse will be merged into UBS and the combined entity will operate as a consolidated banking group.

The two companies will continue to operate independently for the foreseeable future and UBS will “carry out the integration in a phased approach”, the wealth manager said.

Sergio Ermotti, UBS Group chief executive, said: “This is a pivotal moment for UBS, Credit Suisse and the entire banking industry. Together we will solidify and represent the Swiss model for finance around the world, one that is capital-light, less reliant on taking risk and anchored by stability and high-touch service.

“This transaction will allow us to offer attractive returns to our shareholders and give us capacity to further invest and grow. With the new operating model and leadership team, UBS is well-equipped to build on its existing strength and the successes of the past decade.

“The integration of the businesses and legal entities will take time. But adding Credit Suisse to UBS’s highly capital-accretive business model, diversified revenue streams, disciplined risk management and balance sheet for all seasons will benefit our clients, employees, investors, the economies we serve and the wider financial system.”

Details

At the time of legal close, the following governance will apply:

• UBS Group will initially manage the two separate parent companies – UBS and Credit Suisse. Each institution will continue to have its own subsidiaries and branches, serve its clients, and deal with counterparties;
• The UBS Group board of directors and the UBS Group executive board will hold overall responsibility for the consolidated group; and
• Pending further integration, Credit Suisse will continue to rely on its established governance and risk control frameworks, though some new policies will be put in place to ensure that UBS Group has effective oversight.

The combined firm will operate with five business divisions, seven functions and four regions, and in addition Credit Suisse. Each will be represented by a group executive board member, all of whom will report to Ermotti.

Credit Suisse chief executive Ulrich Körner will become a member of the UBS Group executive board upon transaction close. With his knowledge of both organisations, he will be responsible for ensuring Credit Suisse’s operational continuity and client focus, while supporting the integration process.

Divisional changes

Iqbal Khan will remain president of UBS Global Wealth Management and Rob Karofsky will remain president of its investment bank.

Sabine Keller-Busse will remain president of personal and corporate banking, and president of Switzerland. Suni Harford will remain president of asset management and lead for sustainability and impact

Beatriz Martin Jimenez will become head of non-core and legacy, and president of Emea. She will remain UBS chief executive for the UK and will continue in her role as group treasurer until a successor is named.

Management changes

Todd Tuckner has been appointed group chief financial officer. He will become a member of the group executive board with immediate effect and take on the role of chief financial officer at close of the acquisition.

Having joined UBS in 2004, Tuckner is currently chief financial officer and head of business performance and risk management for its global wealth management division and has held various leadership roles across finance in the US and Switzerland.

He will succeed Sarah Youngwood, who has decided to leave the firm after the transaction closes. She has been at UBS since 2022.

Michelle Bereaux will become group integration officer. She has spent nearly 23 years at UBS and has held various leadership roles across the firm.

She previously served as chief operating officer and head of human resources for UBS’ investment bank, and most recently was chief operating officer and UK country head of its asset management business.

Elsewhere, UBS has named Mike Dargan as group chief operations and technology officer, and Stefan Seiler as group head of human resources and corporate services. Also, Christian Bluhm will remain group chief risk officer, Barbara Levi will remain group general counsel and Markus Ronner will remain group chief compliance and governance officer.

UBS said: “Upon transaction close, all Credit Suisse executive board members and permanent guests who are also division and function heads will report to both their respective UBS executive board member and Körner.

“This will ensure that Credit Suisse remains accountable for its day-to-day operations, while facilitating the integration of the respective areas into UBS over time. As previously announced, UBS will evaluate all options for Credit Suisse’s Swiss business and will communicate further on this matter in the coming months.”

Regional changes

The wealth manager also said that Naureen Hassan will remain as president for the Americas and Edmund Koh will remain president for Asia Pacific.

But Martin Jimenez will become president for the Emea region.

UBS added that it is “confident that it has the right operating model and leadership team for a successful integration”.

“It is committed to providing regular updates on the integration process over time.”