With investment products such as funds and ETFs, UBS is catching up with the international giants through its merger with Credit Suisse.

UBS's acquisition of competitor Credit Suisse creates a new financial giant that will play a leading role among the big players in several areas. Among other things, it will become a leading provider of fund products and exchange-traded investment funds (ETFs).

While still unclear how the two major Swiss banks will merge their fund and ETF management businesses, it is becoming apparent that a combined fund and ETF business will be one of the largest not only in Europe but worldwide.

Cracking the Top Ten

Data provider Lipper looked into the question of how the merger of the two fund and ETF divisions will affect the assets under management of the «new UBS.»

As a result of the merger, the newly formed Swiss banking giant is taking a giant step forward. The new entity will have $811 billion in assets under management in mutual funds and ETFs worldwide, according to data available at the end of February. That will make the new UBS the ninth-largest provider of mutual funds and ETFs in the world up from 15th.

Blackrock is on its Heels

In its home market of Europe, the merger has an even greater impact. The new UBS will be the second-largest provider of mutual funds and ETFs in Europe after US asset manager Blackrock, with $597.3 billion. As the largest European fund seller in the future, it will be well ahead of Amundi which has 526.4 billion euros in terms of assets under management.

In the European ETF industry, the future UBS (89 billion euros) displaces US financial giant Vanguard (85.1 billion euros) in fifth place as the new number four. Lipper expects the concentration in the European ETF industry to increase further and competition to intensify.

Fund experts speculate the new UBS could develop ambitions to become the third-largest ETF provider in Europe. Blackrock had also bid for the crisis-ridden Credit Suisse.

Enormous Savings Potential

But UBS also sees enormous potential for cost savings. According to Lipper, the firm is expected to integrate several of Credit Suisse's funds and ETFs into existing UBS products to save on administrative costs and create economies of scale for the acquired funds.