UBS Earmarks $900mn For Greensill Fallout; Deutsche Bank Expands Investment Bank In Revenue Push
By The Banker
UBS stated on Monday that it will allocate approximately $900mn to reimburse investors in Credit Suisse funds tied to the collapsed supply-chain financing firm Greensill Capital.
The collapse of Greensill in 2021 affected hundreds of Credit Suisse’s top clients, who had invested in $10bn of supply-chain-finance funds marketed as low-risk with high returns. So far, these clients have recovered over $7bn.
The $900mn provision for the repayment will be recorded in the second quarter of 2024 and drawn from the $4bn UBS had reserved for litigation and regulatory costs when it took over Credit Suisse.
Greensill, founded by Lex Greensill and backed by SoftBank, failed after losing its insurance coverage, leading to a major lobbying scandal involving former UK Prime Minister David Cameron. The collapse was one of several issues that plagued Credit Suisse before UBS’s Swiss government-backed rescue in March 2023.
According to a Reuters report, UBS’s debt recovery team, which includes former Credit Suisse members, is continuing efforts to recover around $2.5bn which is still outstanding from the supply-chain-finance funds.
Deutsche Bank has been engaging in a hiring spree, adding more than 100 investment bankers in the past 18 months as part of a push to enhance its revenue and reduce its dependence on bond trading.
As reported by the Financial Times, since early 2023, the German lender has recruited 125 bankers, including 75 at senior levels and integrated 300 staff from its recent acquisition of UK broker Numis.
Head of Deutsche’s corporate and investment bank, Fabrizio Campelli told the FT that the lender is aiming to offset its volatile fixed-income trading business by expanding its corporate finance advisory arm, which advises on acquisitions, debt, equity and initial public offerings.
Deutsche’s hiring spree marks a reversal of the lender’s post-global financial crisis strategy of downsizing its investment banking division and coincides with a recovery in global mergers and acquisitions. Deutsche rose to seventh place in the investment banking fees league table for the first quarter of 2024, up from 11th for the whole of 2023, according to data provider Dealogic.
The European Central Bank’s chief economist, Philip Lane, has dismissed calls for ECB intervention to support France’s bond market, stating the recent market turbulence fuelled by political uncertainty was not “disorderly”.
French bond markets faced a sharp sell-off last week as investors reacted to the possibility of a far-right majority following President Emmanuel Macron’s snap election call.
Some financial analysts have speculated about an ECB intervention; however, in an interview with Reuters, Lane said that the current market repricing did not meet the criteria for ECB action.
Marine Le Pen’s far-right Rassemblement National party, which leads in opinion polls, is calling for a lowering of the state pension age, energy price reductions, increasing public spending and a protectionist “France first” economic policy.
French finance minister Bruno Le Maire has warned that France would be at risk of a financial crisis if the far right wins in the election, to be held on June 30 and July 7.
ING Bank is aiming for 4 to 5 per cent annual income growth through 2027, driven by an expected increase in net interest income and fees, while reduced loan losses are expected to offset rising costs. Following the announcement, ING shares rose up to 2.4 per cent in Amsterdam.
According to its statement on Monday, the Dutch lender is targeting a return on equity of 14 per cent by 2027 and aiming for €5bn in fee income.
While higher interest rates have benefited European banks, including ING, the European Central Bank’s recent rate cuts have prompted ING to diversify its revenue streams. The bank plans to generate an additional €1bn in fee income by 2027 through client acquisition and pricing adjustments.
