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The weak UBS share price isn’t just a thorn in the side of investors, but could also make the bank a tasty takeover candidate. Does the Swiss giant need to worry about a takeover?

The situation is paradoxical. UBS is the biggest wealth manager in the world, enjoys an unrivaled reputation in the growth markets of Asia and pursues a profitable and solid business strategy. Its share price however has been treading water now for years, and this is annoying an increasing number of shareholders, as finews.asia reported on Friday.

A low share price increases the danger of a company becoming the victim of a takeover, as has been shown in the past. What looks at first sight as absurdly unlikely in the case of UBS, cannot however be excluded. Which foreign banks might attempt such a move?

UBS a Bargain?

A number of Chinese concerns have been moving into Europe, although an attempt from this quarter looks unlikely as Asian institutes simply lack the necessary expertise. Approaches from a European financial rival would seem just as improbable. The U.S. though is a different proposition

With a market capitalization of some 57 billion Swiss francs ($57.4 billion), UBS would represent a real bargain for one of the heavyweight U.S. financial institutions – like J.P. Morgan. By comparison the U.S. bank has a current market value of $372 billion. It posted a 2017 profit of $24.4 billion (UBS: 1.2 billion francs; excluding U.S. tax liabilities 2.9 billion francs).

So the American bank would certainly have the necessary spare change – especially at present share prices – to snap up UBS. For J.P. Morgan, a move for UBS would make sense for many reasons: as a leading global wealth manager, the Swiss bank manages some 2.3 trillion francs in client assets, most of which are in tax-compliant assets.

Complementary Fit

For one thing, UBS is unmatched and by far the largest private bank in Asia, which attracts wealthy Chinese with their penchant for Asian art (Art Basel Hong Kong), philanthropy and an understanding of business practices and family offices.

In addition there is its Swiss heritage, its leadership in digitalization, and a relatively small but exclusive investment bank. Given these factors, UBS would certainly be a good fit for J.P. Morgan. The Swiss bank's hometown operation could be sold on or continue as an independent, listed company.

Dimon's Legacy?

There is something else to consider: J.P.Morgan CEO Jamie Dimon finds himself at the peak of his career. In office since October 2005, he not only negotiated the financial crisis with aplomb but has driven the bank to further success.

The only banker who comes close to matching his achievement is Lloyd Blankfein, head of rival Goldman Sachs. Blankfein however last week gave notice he was quitting, as finews.asia also reported. Against this backdrop, it would not be surprising if the 62-yaer-old Dimon didn’t use the purchase of the largest Swiss bank as a personal legacy.

Critical at 14 Sfr

Any resistance to a foreign takeover is unlikely since the majority of UBS shareholders are now institutional investors, mandated with achieving the highest possible returns. And if the offer is good enough, wouldn’t hesitate to sell their shares.