In H1’23, following the acquisition, UBS reduced CS’ risk-weighted assets¹ (RWAs) by 12% from USD271 bn to USD238 bn. Any further asset disposal, such as the sale of its China brokerage unit, will potentially free up significant capital for the bank. UBS’ non-core unit consists of ~USD55 bn of RWAs, including ~USD17 bn from CS. However, CS’ China brokerage unit is expected to attract bids of at least RMB1 bn (USD137 mn), accounting only for 0.25% of UBS’ total RWAs, including estimated operational RWAs.

Meanwhile, UBS has outlined a plan to naturally reduce its non-core RWAs by 50% (~USD75 bn) between Q2’23 and end-2026. It may accelerate the process of winding down depending on its benefits (capital release vs losses booked).

Berenberg (a global private and merchant bank based in Germany) has stated that UBS can maintain its profitability while undergoing restructuring. Such an outcome will be remarkable because in the last 15 years most of its European peers have suffered significant loss and witnessed reduced book value per share when they implemented major restructuring plans.

Additionally, the sale of CS’ China brokerage unit could be a steppingstone for UBS to meet its cost-cutting objectives, which have been underway since its CS acquisition. The bank expects to save about USD10 bn and keep its cost-to-income ratio below 70% by the end of 2026. It also expects to break even in Q3’23 and record a positive underlying pre-tax profit in H1’23 due to revenue stabilization, cost savings, and financing cost reductions. UBS expects the sale of the brokerage unit to improve its flexibility for subsequent spin-offs and listings.

While UBS aims to continue growing its core businesses, its plans could be offset by revenue dis-synergies, if the integration with CS results in loss of revenue due to overlapping clients, departing relationship managers, organizational disruptions, and competitor poaching.