It’s a project that has been two years in the making.
When UBS started drafting plans in 2014 to set up a pan-European bank under the code name Cobalt, London was the most obvious choice for the unit’s headquarters.
Britain’s decision this year to leave the European Union, however, changed the Swiss bank’s calculations, and London’s loss has become continent’s gain.
“We will become the leading asset manager in Europe. We can further strengthen our capital and focus completely on investing and additional growth. ”
UBS on Thursday officially launched its pan-European bank, Europe SE, in Frankfurt, Handelsblatt has learned. The new unit bundles UBS banking operations in eight countries – Germany, Italy, Luxembourg, Austria, Denmark, Sweden, the Netherlands and Spain. The UBS shops in France and Britain currently aren’t included in Europe SE.
The Swiss bank has also decided to roll its continental investment banking unit, previously run by the UBS subsidiary in London, into the new pan-European bank in Frankfurt. That also marks a shift from the original plan, which saw the bundling only of its asset-management division.
The move puts the German financial capital in pole position to receive up to 1,500 UBS positions if the Swiss bank decides to relocate its London staff to the continent in the wake of Brexit.
With more than €200 billion in assets and 2,500 employees, Europe SE is a new heavyweight in the European financial market. UBS currently has a staff of 650 in Frankfurt, but that number is expected to grow by double digits with the integration of its risk management and legal divisions.
“Fully conscious of the Brexit discussions, we have also integrated the investment bank into the SE,” Thomas Rodermann, the head of UBS in Germany who will become the new head of the Europe SE, told Handelsblatt.
In addition to Mr. Rodermann taking the top executive spot, the former German politician Roland Koch will become the new European division’s non-executive supervisory board chairman, sources said.
Though Brexit looms large in the thinking at UBS, the European Union’s push to forge a banking union, supervised by the European Central Bank in Frankfurt, has also played decisive role. UBS is betting on a future in which there’s a fully integrated, pan-European financial system.
“We will become the leading asset manager in Europe,” Andreas Przewloka, the chief operating officer of the new Europe unit, told Handelsblatt. “We can further strengthen our capital and focus completely on investing and additional growth.”
UBS plans to fuel additional growth with savings achieved through the consolidation of its Europe operations. The Swiss bank will no longer have to capitalize eight different national subsidiaries, freeing up €1 billion ($1.06 billion) for re-investment.
UBS plans to plow hundreds of millions of euros in freed up capital into new IT platforms and digitalization, according to Handelsblatt sources. The Swiss bank declined to comment.
The Swiss bank’s consolidation in Frankfurt may signal a broader trend in the wake of Brexit. U.S. financial institutions such as Goldman Sachs and Citigroup are considering relocating their operations from London to the German capital.
According to Handelsblatt’s sources in the financial industry, Citigroup might relocate its derivatives trade from the British metropolis to Frankfurt, though Paris and Milan are also options. The U.S. bank is expected to make a decision in the coming year.
Daniel Schäfer leads Handelsblatt’s finance section and is based in Frankfurt. Katharina Slodczyk is Handelsblatt’s leading financial correspondent in London. To contact the authors: email@example.com and firstname.lastname@example.org