Zurich, Frankfurt UBS is selling its Spanish business with wealthy private clients to the Madrid-based Singular Bank, thereby withdrawing from an important market. A corresponding contract has already been signed, as the Handelsblatt learned in advance.
The Spanish subsidiary UBS Gestión manages assets of around 14 billion euros. Singular was only founded in 2019 by the former CEO of the major Spanish bank Santander, Javier Marín, and currently manages around five billion euros according to its own information. Singular catapults the takeover of the UBS Spanish business into the home market. UBS, in turn, continues to shrink its European business.
UBS and Singular have agreed not to disclose the purchase price. According to financial circles, it should be between 200 and 250 million euros. The Spanish business has been profitable according to UBS circles.
The more than 200 employees are to be taken over by Singular. The Swiss investment banking activities in Spain and asset management there are not included in the deal; these will remain with UBS.
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“Domestic wealth management in Spain has developed well in recent years and has been sustainably profitable,” explains Christl Novakovic, Head of UBS Europe SE and European Wealth Management.
“After a thorough analysis over the course of this year, however, we came to the conclusion that our Spanish wealth management is better positioned for future growth with a focused asset manager based in Spain,” said Novakovic. Europe remains a central market: “Our priority is to further expand our leading position in our core markets and to grow profitably.”
Already withdrawn from Austria
It was only at the end of 2020 that UBS withdrew from Austria and sold the business, which had around four billion in assets under management, to the Liechtenstein-based LGT.
Wealth management in Austria and Spain was profitable for UBS, but in view of outdated IT and limited growth opportunities, there was apparently no imagination for the future. It is said that you had to buy in Spain in order to continue to be on a par with the competition. However, they would prefer to invest this money in core markets such as Germany and Great Britain.
In the past few months, UBS had negotiated the sale of the Spanish business with several possible bidders. According to Handelsblatt information, the Swiss competition from Julius Baer was one of the potential buyers. According to financial circles, however, this withdrew due to different price expectations, among other things.
It is surprising that the choice fell on Singular: The Spanish bank is two years old and an idea of Marín, who is considered to be a kind of jack-of-all-trades in the Spanish banking market. Marín worked at Santander from 1991, where, among other things, he was head of global private banking.
In 2018 he bought the Spanish broker Self Bank from the French Société Générale for 40 million euros with other bankers and the support of the US private equity giant Warburg Pincus. With the help of the UBS business, he now wants to become a major player in the wealth management market in Spain.
UBS employees in Madrid worried
According to media reports, the rumors about the imminent takeover caused unrest among UBS employees in Madrid. According to this, the bankers there would have preferred to see a takeover by a Swiss or German competitor from the traditional banking sector than by a newly founded so-called Challenger bank, which thanks to Warburg Pincus can pay more for the takeover, but has a much more unknown brand than Julius, for example Bear.
From UBS’s point of view, one detail of the plan could be particularly forward-looking: UBS and Singular have agreed to sign a “cooperation agreement” by the time the deal is closed in the third quarter of 2022. According to corporate circles, this should include the possibility of selling UBS products and services in Spain in the future – for example in the form of a franchise or white label model, i.e. under the singular flag.
The plan is a test run, but if it works it could also open up future sales opportunities for UBS in smaller markets in which it is no longer active with its own unit.
The core markets for asset management include Great Britain including Jersey, Germany, France, Italy, Luxembourg and Monaco. According to UBS circles, all of these markets are profitable after the restructuring of recent years, albeit at different levels. In Germany, which has been in the red for a long time, the trend reversed in 2020, and in France the Swiss are hoping for a halfway mild outcome of a multi-billion dollar criminal tax procedure.
There should be no withdrawal from other markets in European asset management, it is said in corporate circles, at least as of now.
More: UBS and the Spacs business: The bank (almost) always wins.