UBS and Nomura Expand Fixed-Income Products for Europe's Ultra-Rich

UBS Group AG and Nomura Holdings Inc. are expanding their fixed-income products to attract Europe's ultra-rich, offering 5%-8% income amidst global rate hikes. The recent surge in central bank rates has prompted high net worth individuals and family offices to shift focus from stock-based portfolios to steady income through rates or credit-linked products. Nomura is increasing sales of various bonds to high net worth individuals through private banks and distributors, emphasizing quick and efficient service through technological updates. UBS, Switzerland's largest bank, has bolstered its structured rates offering by integrating Credit Suisse's expertise, aiming to outpace competitors like BNP Paribas.

Key Takeaways

• UBS and Nomura are targeting Europe's ultra-rich with fixed-income products, offering 5%-8% income amid global rate hikes.
• The recent spike in central bank rates has shifted the focus of high net worth individuals and family offices from stock-based portfolios to steady income through rates or credit-linked products.
• Both banks are expanding their offerings and client bases, UBS integrates Credit Suisse’s expertise for unique structured rates products, and Nomura broadens its client base across Europe.
• Nomura is increasing its sales of credit-linked notes, floating-rate notes, and inflation-linked bonds to high net worth individuals through private banks, and has added about 45 new private banks and distributors for these products.
• UBS, after downsizing its fixed income presence in 2012, is utilizing the expertise gained from the Credit Suisse rescue in 2020 to strengthen its range of complicated rates products for its extensive wealth management clientele.

Analysis

UBS Group AG and Nomura Holdings Inc. are capitalizing on the recent surge in central bank rates to attract Europe's high net worth individuals, offering fixed-income products with 5%-8% income. This shift from stock-based portfolios to steady income through rates or credit-linked products is a response to the global rate hikes and has prompted both banks to expand their offerings and client bases. UBS's integration of Credit Suisse's expertise and Nomura's technological updates indicate a long-term strategy to outpace competitors like BNP Paribas. The consequences may include increased competition, potential market disruption, and the need for other financial institutions to adapt to this new trend.

Did You Know?

• Fixed-Income Products: Both UBS and Nomura are targeting Europe's ultra-rich with fixed-income products, offering 5%-8% income amidst global rate hikes. This includes credit-linked notes, floating-rate notes, and inflation-linked bonds, which are forms of debt securities that provide a regular income stream to the investor.

• Credit-Linked Products: The recent surge in central bank rates has prompted high net worth individuals and family offices to shift focus from stock-based portfolios to steady income through rates or credit-linked products. Credit-linked products are financial instruments that allow investors to gain exposure to credit risk.

• Structured Rates Offering: UBS, Switzerland's largest bank, has bolstered its structured rates offering by integrating Credit Suisse's expertise, aiming to outpace competitors like BNP Paribas. Structured rates products are specialized financial instruments that combine interest rate products with other derivatives to create tailored investment strategies for clients.