Switzerland's major banks have long felt they don't get the credit they are due from shareholders because of their wealth operations. Now both UBS and Credit Suisse have been upended from Europe's banking sector.
UBS and Credit Suisse are no longer banks – at least according to index firm FTSE Russell, which reclassified the two Swiss firms. UBS is now categorized as an asset manager, while Credit Suisse ranks as a specialty finance provider. UBS reaps more than half its revenue from wealth management, while Credit Suisse books roughly one-quarter of revenue from banking, FTSE Russell noted in its reasoning for the move.
As a result, both Swiss lenders are booted from the Stoxx Europe 600 bank index, the only large European banks not represented on the benchmark. UBS and Credit Suisse will be listed on Stoxx's Europe 600 financial services index instead. Neither bank commented on the move.
ETFs to Fall Away
The reclassification, effective from June 22, means investors tracking the banking benchmark will drop off. UBS and Credit Suisse shares will also no longer be mirrors in exchange-traded funds based on the Stoxx banking index.
It remains to be seen whether the move will improve the stock price of either firm, long a worry for UBS CEO Sergio Ermotti, who last year suffered the indignity of the bank's shares breaching the psychologically key 10 Swiss franc mark. The Swiss banker has persistently argued that UBS' extensive wealth management activities should be worth more than investors give the bank credit for.
