UBS vs Morgan Stanley Comparison and Valuation

In the world of finance, two of the most well-known players are UBS and Morgan Stanley. UBS, with its headquarters in Zurich, Switzerland, has a long history dating back to 1862.

Morgan Stanley, on the other hand, is an American multinational investment bank founded in 1935. Both banks have a strong presence in the global financial market.

One key difference between the two is their business model. UBS focuses on wealth management, investment banking, and asset management, while Morgan Stanley has a more diversified business model that includes investment banking, asset management, and trading.

Morgan Stanley has a larger market capitalization, with a value of over $130 billion, compared to UBS's market capitalization of around $70 billion.

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UBS and Morgan Stanley are two of the largest investment banks in the world. UBS has a stronger presence in Europe, while Morgan Stanley is more prominent in the US.

UBS has a more comprehensive wealth management platform, offering a wider range of investment products and services. Its global wealth management business has over $1 trillion in assets under management.

Morgan Stanley, on the other hand, has a stronger focus on investment banking and trading. Its investment bank is one of the largest in the world, with a market share of over 10%.

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Morgan Stanley, backed by the U.S. government, enjoys a "U.S. valuation premium" due to its ability to take on unlimited amounts of debt and having a central bank ten times bigger than the Swiss National Bank.

This premium is a natural consequence of the U.S. government's capabilities. The Fed, the central bank, is significantly larger than the Swiss National Bank.

Investors know that in times of crisis, U.S. banks will receive priority rescue operations from their government. This is not just a matter of liquidity injections, but also of competitive regulations and capital requirements.

The big U.S. banks, including Morgan Stanley, still don't meet the Basel III requirements. They were not better capitalized than Credit Suisse was, despite the recent SVB default.

The U.S. government has made it clear that it will prioritize its own banks in times of crisis. This is evident in the all-out guarantee given to deposits in the entire banking system after the SVB default.

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UBS has a better business mix than JPMorgan because of its diversified wealth management exposure. This is according to analysts at JPMorgan Chase & Co, who note that UBS has a more attractive business mix than its US peer Morgan Stanley.

UBS's wealth management franchise is stronger outside of the US, particularly in Asia, which is seen as a key growth area. In fact, UBS is highly geared to Asia, making it a "sweet spot" for the bank.

JPMorgan analyst Kian Abouhossein believes that UBS's business mix is superior to Morgan Stanley's, thanks in part to its domestic Swiss Bank, which is essentially a cash cow. This means that UBS has a more stable source of revenue than Morgan Stanley.

The Swiss bank's investment bank consumes less than 25% of group risk-weighted assets, compared to 50% at Morgan Stanley. This suggests that UBS is better positioned to manage risk and generate earnings.

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