Switzerland's largest bank has been struggling with its share price for some time. Its chairman is charting a path for how everything will be better in 2023, but unknown factors are lurking. 

Despite the subdued investment mood in Europe, the financial markets have risen since the beginning of the year. In Switzerland, the Swiss Performance Index (SPI) gained 5.8 percent, its second-best performance since 2000, behind only 2013's 6.4 percent gain.

Even Credit Suisse shares, badly battered last year, rose by 13.1 percent, while UBS gained 11.5 percent over the same period.

Ungrateful Investors

Even with this performance, UBS Chairman Colm Kelleher is still not satisfied with the price of UBS shares, a sentiment he expressed to the «Neue Zuercher Zeitung» (in German, behind paywall) over the weekend. «Investors don't see UBS for what we are,» he told the newspaper. «Morgan Stanley trades between 1.4 and 2 times book value. UBS at simple book value. There is no reason why we should be trading at a discount to US banks,» he said.

Paradoxically, UBS is in a quandary. It is considered the most efficient bank in Europe and is the world's largest wealth manager with a strong presence in Asia and other growth markets. But investors are not rewarding this. Or at least enough, according to Kelleher.

Growth is Elsewhere

Kelleher unequivocally said how he intends to increase UBS's attractiveness as a magnet for investment, in which the US plays a key role. Switzerland no longer has much to offer as a growth market, he admits in the interview. «We have a great Swiss core business. It stabilizes the ship and keeps it calmly afloat. But the engine is elsewhere. In a country of 8.7 million people, we can't expand the business significantly.»

On the other side of the Atlantic, he sees more growth potential and rich a pool of institutional investors among insurance, pension, and investment companies that need to be courted more intensively. «We need to get institutional investors, especially in the US, to buy our shares. An important step toward that is getting US analysts to look at us in more depth,» Kelleher said.

Improving Margins in the US

To date, no top UBS executive has stated it so clearly on the record. UBS's growth markets, with their roots in Switzerland, are in the US and Asia, and the investment focus needs to become more international. Namely on the other side of the Atlantic. «We are not yet developing our full potential in the US. Above all, we need to get the wealth management business up and running and achieve an improvement in margins there.»

UBS is once again pinning a large part of its hopes on the US. It has done this several times in the past with no good outcome. But maybe this time is different. With a chairman steeled on Wall Street at Morgan Stanley, things could turn out more favorable, but it will take time to see if the outcome is successful.

Competition From Across The Street

Those responsible at UBS would be remiss to ignore they are facing new competition from an old competitor. from Switzerland in Credit Suisse, which will leave no stone unturned to win back lost market share. Credit Suisse will announce a big loss on February 9, after which it hopes the worst will be behind it.

The race between the two major Swiss banks is likely to heat up again. After a few years of dominance, Kelleher will have to prepare himself for tough competition from the Paradeplatz rival, especially in Asia and in other growth markets. UBS has no designs on swallowing up Credit Suisse, something which Kelleher emphatically expressed.

«We have no desire to buy Credit Suisse,» he told the «NZZ».