UBS Climbs to Top of Covered Bond Rankings for First Time

UBS AG is arranging more covered bonds than its competitors for the first time in at least 15 years even after Switzerland’s largest bank scaled back its fixed income business and focused on wealthy clients.

UBS underwrote 6.9 billion euros ($9.4 billion) of new issues this year, almost double the 3.5 billion euros it arranged in the same period of 2013, according to data compiled by Bloomberg. The Zurich-based bank leaped ahead of UniCredit SpA, Barclays Plc, BNP Paribas SA and Deutsche Bank AG, the top four arrangers last year, the data show.

UBS is among European lenders retreating from debt-related businesses to comply with regulatory demands for larger capital buffers. The Swiss lender, which announced 10,000 job cuts in 2012, is shifting its focus to arranging debt sales as it seeks to boost profitability and reduce risk-weighted assets.

“Because capital nowadays is very expensive compared to where it used to be, you have to adjust your business model to your strengths,” said Armin Peter, head of European debt syndicate at UBS in London. “Because UBS was the first to go through this, that led to the perception that UBS retreated from everything in fixed income, which is completely wrong.”

Barclays, which led underwriters for the past two years, slid to sixth place in the league table rankings for the first half of this year, arranging 4.7 billion euros of deals, according to data compiled by Bloomberg. The U.K.’s second-biggest lender is cutting 7,000 jobs at its investment bank amid a decline in profits from fixed income, currencies and commodities.

Jon Laycock, a spokesman for Barclays in London, declined to comment on the bank’s covered bond business.

Second Place

UniCredit held on to second place after underwriting 6.3 billion euros of securities, data compiled by Bloomberg show. Covered bonds are an important funding tool for financial institutions and UniCredit has been active in the debt since the beginning of the market, said Marco Bales, the Munich-based global head of capital markets at Italy’s largest bank.

Covered bonds, which are backed by mortgages and public sector loans, are heading for a second year of net negative supply as cheap funding from central banks and regulatory pressure on lenders to trim balance sheets reduce banks’ needs to go to the market.

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