Financial Markets Reel as Trump’s Tariffs Take a Toll
Global stock markets are in turmoil following US President Donald Trump’s recent trade measures, with the financial sector particularly hard hit. Swiss banking giant UBS is among the worst affected, with its shares plummeting in value. According to the Sunday edition of a Swiss newspaper, the bank is at risk of being taken over if the downward trend continues.
The impact of Trump’s tariffs has not only affected industrial companies, but also the financial sector as a whole. As global indices plummet, UBS has seen a massive decline in its stock price, with its market value now barely covering the book value of its equity. If the share price continues to fall, UBS could become an attractive takeover target.
The outlook for the start of the week is alarming, with futures indicating a decline in US stock markets. A drop of this magnitude could trigger a chain reaction, forcing institutional investors to sell off their holdings. Experts are drawing comparisons with the market crashes of 1929, 1987 and 2008.
UBS was previously seen as a beneficiary of the forced merger with Credit Suisse. However, the euphoria has worn off. The bank’s record profit last year, largely due to the acquisition of CS, has proven to be a one-time event. UBS is now struggling to make a profit, earning less than its US competitors. CEO Sergio Ermotti must now demonstrate that the promised synergies are real.
If the share price losses continue, UBS will inevitably become a takeover target, with the already favorable market conditions now a thing of the past.
The bank’s CEO must also address the planned job cuts, with only half of the 30,000 planned layoffs implemented so far. Recently, it was announced that UBS would be cutting jobs in Italy, a sign of potential further layoffs in Switzerland, expected for the fall. IT departments, which became redundant due to the merger of UBS and CS systems, are particularly affected.
The bank is also under pressure due to its wealth management arm, as managed assets decline due to high losses and some clients potentially withdrawing their funds. Asian clients, known for their risk-taking, could be particularly affected.
Iqbal Khan, responsible for the bank’s wealth management, previously held a similar position at Credit Suisse. It remains to be seen whether UBS can weather the current turmoil or become a takeover target. The bank has so far declined to comment on the dramatic decline in its share price.