UBS, the Swiss banking group, yesterday made a major expansion into America's investment banking market - the largest in the world - paying $265m (£147m) for Charles Schwab's market-making, research and institutional trading business.
The move will give UBS control of a substantial amount of New York's share trading business and will beef up the Zurich-based group's presence on Wall Street.
The acquisition of Charles Schwab SoundView Capital Markets will make UBS the number 2 trader in the mainly hi-tech stocks listed on Nasdaq, analysts said. The move comes at a time when the fortunes of many Nasdaq companies are picking up, with investors looking again at shares in technology companies after they lost much of their value in the past few years. The sector is also in the spotlight after the internet search engine, Google, pulled off its long-awaited initial public offering two weeks ago.
The deal will give UBS access to more than 12,000 buyers and sellers of equities. It will also acquire an automatic trading system catering for institutional investors. The business will become part of the equities unit of the investment bank of UBS, the group said.
The sale is a reversal for Schwab, which eight months ago bought SoundView Technology Group for $321m, and ends the San Francisco-based company's efforts to develop an institutional trading business.
UBS said it hoped the transaction would help it become "one of the top traders in Nasdaq securities", improving its current position as number 10.
The Swiss bank has already signalled its interest in expanding in the US. Four years ago it paid $11.5bn for Paine Webber, the fourth-largest brokerage in the US at the time. Last year it added part of ABN's brokerage for $250m to expand its hedge fund business.
The sale by Schwab marks an end to a troubled period for the company, coming a month after the chief executive of the brokerage, David Pottruck, was ousted. Charles Schwab, the 67-year-old who founded the company, replaced Mr Pottruck after the company had suffered a three-year decline in revenues.
Schwab said it had made a "strategic decision" to focus on "serving individual investors and independent financial advisors who work with them".
As part of the deal, UBS will handle Schwab's stock and options trading for eight years.Reuse content