The Swiss apart from their political neutrality is also known for their financial institutions, in many ways, it is arguably the bank of the world. One of those big names in their banking paradigm, UBS is in the news.
Shares Drop, As Buybacks Begin
The company's shares that have been on the decline over the past week, dipped even further, by a significant 1.37 per cent in just one day on 5 April, on the Zurich-based SIX Swiss Exchange, with the value of each share standing at CHF or Swiss Francs 28.17. This came to pass after the news of the banking giant scale back came to fore. UBS is planning to buy back shares worth USD 2 billion.
This is seen as an attempt by the company to reduce its size and operations. Earlier, apart previous buyback exercises, the bank had also relinquished its shares worth a massive USD 8 billion value, in an American asset management company Apollo Asset Management.
A share buyback is a market tool employed by corporations listed on the market, who resort to repurchasing its own shares from the market, subsequently canceling them and ultimately reducing the total amount of outstanding shares, thus decreasing the company's share capital. Here outstanding shares, are the shares that are on offer in the public domain.
UBS is the same company, that was 'saved' the sinking ship of another Swiss bank, Credit Suisse, who bungled up by failing to execute its strategic priorities | Reuters
Concerted Consolidation
UBS is the same company, that was 'saved' the sinking ship of another Swiss bank, Credit Suisse, who bungled up by failing to execute its strategic priorities, in addition it was marred by repeated scandals, and management missteps. This eventually resulted in Credit Suisse facing a loss of trust from its clients, investors, and the markets, eventually leading them to insolvency in 2023.
This is when UBS comes in and 'rescues' the bank. But, for this, UBS carried out a similar buyback exercise to generate resources to invest in the flagging bank.
It has now done the same, again to reduce its size. In the turbulent times, that most of Europe and its major economies, including Germany and France are going through, it is perhaps a move ahead of the curve to limit the flight of the expansive banks, before a more severe financial crisis comes to pass.
Currently the valuation of UBS stands at USD 100.26 billion.
