UBS’s M&A bankers face challenges in Q1, but still see compensation

into a single group earlier this month, but let none of its sponsors bankers go. Dealogic says its sponsors revenues have collapsed since a high point in 2021. However, UBS still had the largest M&A advisory business of any European bank in the second quarter.

UBS’s combined equity and debt capital markets revenues also fell 24%. The bank doesn’t break them out into individual revenue lines, but said higher ECM revenues were offset by lower leveraged capital markets revenues and $65m of leveraged finance related markdowns.

Traders at the Swiss bank, however, did well, with combined global markets revenues rising 26% year-on-year in Q2. This success helped drive profits in the investment bank 28% higher, potentially explaining the 7% increase in operating expenses largely due to rising personnel costs. Traders may be anticipating an increase in their compensation.

Despite these positive results in trading, UBS still has goals to reduce costs. The bank aims to eliminate $13bn in cumulative costs by the end of 2026, having already removed $9.1bn. It still needs to cut another $900m this year. UBS has already spent $11.1bn on integrating Credit Suisse and expects to spend an additional $1.4bn this year, with a total of $14bn by the end of 2026.

Overall, UBS continues to face challenges in its M&A advisory business, with declining revenues attributed to lower private fund and M&A activity. The bank has made strategic moves such as reorganizing its global M&A and financial sponsors teams and hiring new M&A bankers to improve its position in the market. Despite setbacks in the M&A sector, UBS’s trading division has shown significant growth, leading to higher profits and potentially increased compensation for its traders.

As UBS works towards achieving its cost reduction targets and navigating changing market conditions, the bank remains focused on strengthening its position in both the M&A advisory and trading sectors. The financial landscape may be challenging, but UBS’s strategic decisions and financial performance reflect its commitment to adapting and thriving in the evolving market environment.