UBS and Wealthfront walk away from USD 1.4 bln merger agreement

In January 2022, UBS agreed to purchase Wealthfront in an all-cash deal. The acquisition of Wealthfront, which has more than 470,000 clients in the US and caters to well-off millennial and Gen Z investors, was set to close in the second half of 2022.

However, the two companies have decided to walk away from this deal for an undisclosed reason. Instead, UBS gave Wealthfront USD 69.7 million in financing.  According to official Wealthfront representatives cited by bankingdive.com, the entities continue to explore ways to work together in a partnership. The same source revealed that Wealthfront’s path as an independent company will allow it to become cash flow positive and EBITDA profitable in the next few months.

The transaction was supposed to close by December 2022, and it would have added more than USD 27 billion in assets under management to UBS’s portfolio. The deal would have also given the Swiss bank access to Wealthfront’s 470,000 clients, many of whom fit in the millennial or Gen Z demographics. 

According to bankingdive.com, UBS’s clientele includes more than half of the world’s billionaires. The merger with Wealthfront would have allowed the Swiss bank to target customers with assets between USD 250,000 and USD 2 million.

Recent developments from UBS

In November 2021, UBS partnered with Switzerland-based expense management fintech Yokoy in order to bring digitalisation to the financial sector. Following the partnership, Yokoy could enable large companies to automate the processes of spend management. By integrating credit card transactions into the Yokoy app, clients could make use of automatic data reconciliation.

According to a UBS representative, the partnership with Yokoy complemented their corporate card solutions offering, as clients with large transaction volumes could benefit from the management of their business expenses.

In December 2021, UBS has filed an appeal with France's Supreme Court against the decision by a Paris court that upheld the Swiss bank's conviction for money laundering, while slashing its penalty for allegedly helping wealthy clients evade taxes. The Paris appeals court reduced UBS's penalty to EUR 1.8 billion, less than half of an overall fine of EUR 4.5 billion imposed against the bank after the first trial in 2019.

Lawyers for the bank had argued in the appeals trial that despite whistleblowers coming forward, investigators had never found clear evidence of systematic attempts by UBS sales consultants to canvass French customers. The bank had also argued that the original fine was disproportionate.