UBS Group (UBS) and Wealthfront Terminate Merger Agreement

UBS Group AG UBS and Wealthfront agreed to terminate their merger agreement, initially announced on Jan 26, 2022, under which Wealthfront was to be acquired by UBS Americas Inc.

Nonetheless, UBS remains committed to its growth plans related to digital wealth management offerings in the United States. It will purchase a $69.7-million note convertible into Wealthfront shares.

Last month, UBS entered an agreement to outsource its U.S. alternative investments feeder fund platform, UBS Fund Advisor LLC, to iCapital, a leading global fintech platform driving access and efficiency in alternative investments for the asset and wealth management industries.

Over the years, UBS Group has been fortifying its footprint in various areas by undertaking partnerships with other firms. In June 2019, it entered a joint venture with Japan’s largest trust banking group, Sumitomo Mitsui Trust Holdings, which gave it access to the latter’s affluent client base.

In the third quarter of 2021, the second phase of this partnership was closed, along with the launch of an operational partnership entity, UBS SuMi TRUST Wealth Management Co., Ltd., which is 51% owned and controlled by UBS Group. In September 2020, UBS Group entered an investment banking joint venture agreement with Banco Do Brasil SA. Given its solid balance-sheet position, UBS  is focused on opportunistic expansion strategies that will aid long-term growth.

UBS Group’s trailing 12-month return on equity (ROE) also supports its growth potential. The company’s ROE of 13.2% compares favorably with 11.1% for the industry. This reflects that it is efficient in using shareholders’ funds compared with the overall market.

However, UBS Group’s flaring cost base exposes it to operational risks. Although the company’s operating expenses declined in 2019, the same saw a compound annual growth rate (CAGR) of 2% in the four-year period (ended 2021).

Over the past year, on the NYSE, shares of UBS have gained 2.6% against the 5.6% decline recorded by the industry.


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Currently, UBS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

TowneBank TOWN signed a deal worth $56 million or $17.82 per share to acquire Farmers Bankshares, Inc. and its subsidiary Farmers Bank. The closing of the deal is expected in the first quarter of 2023.

The transaction is expected to solidify TowneBank’s number one market share in the Virginia Beach-Norfolk-Newport News, MSA. Moreover, with the acquisition, TOWN will be able to expand Towne Insurance revenues.

In an effort to extend data management capabilities, Truist Financial Corporation TFC acquired the key strategic assets from Zaloni, which is an award-winning leader in data technology solution delivery. Following the acquisition, Zaloni’s offshore team will continue to serve its current customers in addition to providing technology delivery services to TFC.

Truist acquired the Zaloni Arena platform to accelerate its data governance, metadata management, advanced analytics, and artificial intelligence and machine learning programs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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