21st June 2024

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Business Industry and Financial

Norway’s $1.4tn oil fund becomes top UBS shareholder

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Norway’s $1.4tn sovereign wealth fund has become the biggest shareholder in UBS, as the Swiss lender tries to win over international investors to the benefits of its historic takeover of Credit Suisse.

Norges Bank Investment Management, which runs the world’s biggest sovereign wealth fund, increased its stake in UBS to above 5 per cent this month, having been a shareholder in the group for almost 20 years.

UBS executives have come under pressure over the past six months to prove to investors that they can make a success of the $3.4bn state-orchestrated rescue of former rival Credit Suisse. Many big fund managers are focused on how well UBS negotiates a complex integration process and how early it restarts shareholder returns.

NBIM, which was already a top-10 UBS shareholder, has overtaken US investors Dodge & Cox and BlackRock to become the largest investor, according to S&P Capital IQ.

NBIM was also a top-10 investor in Credit Suisse when it collapsed in March, but had been selling down its stake.

At Credit Suisse’s final AGM in April, NBIM voted against most of the board and the chair, Axel Lehmann, saying: “Shareholders should have the right to seek changes to the board when it does not act in their best interest.”

In the weeks after the takeover was agreed, Nicolai Tangen, chief executive of NBIM, told Swiss publication Finews: “The Swiss government took the right steps to rescue Credit Suisse. In doing so, it prevented an uncontrollable situation in the Swiss financial centre and beyond.”

Since he became UBS chair 18 months ago, Colm Kelleher has focused on winning over large, predominantly American, active fund managers in an effort to close the bank’s valuation gap with Wall Street peers.

While Switzerland-listed UBS trades at just over one times its book value, Morgan Stanley — where Kelleher spent most of his career — trades at twice that.

Senior executives at UBS believe that, despite its global operations, the bank is seen by investors as Europe-focused, while Wall Street rivals benefit from being listed on the more widely traded US stock market.

Since UBS agreed to rescue Credit Suisse six months ago, its shares have risen more than 30 per cent.

Investors and analysts responded positively to the bank announcing last month that it would not seek state financial support for the deal.

Its stock received a further boost at the end of August when UBS reported $29bn of profit in its second-quarter results — the biggest-ever quarterly haul for a bank — almost entirely fuelled by an accounting gain on the Credit Suisse acquisition.

Analysts have predicted UBS will restart share buybacks next year, which were paused when it agreed to buy Credit Suisse.

UBS and NBIM declined to comment.

Additional reporting by Richard Milne in Oslo