UBS shares jump after Cevian bets £1bn on Credit Suisse merger success
Cevian Capital, Europe’s largest activist investor, has taken a €1.2bn (£1bn) stake in UBS in a bet that the lender will double its share price after taking over Credit Suisse.
The news sent UBS’ shares up 2.3 per cent in Zurich, Switzerland, on Tuesday morning.
Stockholm-based Cevian, which manages more than $14bn (£11bn), is now one of UBS’ top ten investors after taking a roughly 1.3 per cent in the Switzerland-based bank.
The investor said in a statement that the valuation of UBS’ shares could surge to as much as 50 Swiss francs from their price of around 25 at the close on Monday “if the valuation gap to Morgan Stanley” could be closed.
UBS dominates many wealth management markets around the world but is looking to grow in the US to challenge Morgan Stanley in the sector’s largest market.
The state-brokered deal between UBS and Credit Suisse came after years of scandal at the latter firm.
Chief executive Sergio Ermotti is set to announce a strategy for the merged banks in February but is battling high costs as he winds down Credit Suisse’s unprofitable businesses while fully integrating its key Swiss banking unit by the end of 2026.
UBS’ shares are among this year’s top performers on the Swiss Market index and have surged 46 per cent in 2023.
“Cevian sees significant value potential in UBS,” Cevian said. “The board and management team are doing an excellent job integrating Credit Suisse and we have been impressed by their commitment to further improve UBS.”
UBS declined to provide a comment to City PM The Financial Times first reported the news.
Cevian’s successful investments in the sector include Danske Bank, Swedbank and Nordea Bank Abp.
News of Cevian’s investment came as Switzerland’s financial watchdog said its current powers were not enough to save Credit Suisse.
Finma has called for a UK-style senior managers regime, greater powers over fines and more say on corporate governance in a report on the downfall of Credit Suisse.
“When an activist spots an opportunity, they rarely just dip their toe in the water. Instead, they jump straight in, just as we’ve seen with Cevian,” Dan Coatsworth, an investment analyst at AJ Bell, told City PM
He added: “The banking sector is like a juggernaut, impossible to turn around quickly. There are plenty of examples of activist campaigns in this industry which have failed to generate the value uplift desired by activists.
“So while the news of Cevian’s involvement is interesting, this could become a long, drawn-out affair and not the quick fix that you might find in other sectors through asset sales or management changes.”