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What is your message to the 3600 or thereabout participants here at the GCC this year? And what's your general outlook for business in China, for your bank?
Well, actually, it's also great for me to be back here. You know, last year was a quite, you know, important year for China. I think that we saw huge interest coming back on the Chinese markets. You know, the stock performance was great. And we see today, I mean, we have almost 3600 participants. You go through across the board from corporates, institutional clients, family offices, and, you know, coming from all over the world, we see also more interest from overseas, which is indicating the momentum of the Chinese market. So I think that's, you know, we believe this is going to continue the secular trend supporting China in terms of growth in innovation, in technology and biotech is here to stay and investors are realizing that.
So what kind of deal flow, though, are you starting to see as we are starting to see China get some momentum? You talked about the stock market, the CSI 300, up about 17% last year. So it is it's gaining some steam. But also outbound deal flows seems to be growing quite a bit, whether it's investing in factories in Europe or in the global South. It seems like capital is not only coming into China, where foreign interest is obviously looking at that rebound, but also the capital is moving abroad.
Yeah, I mean, look, you know, this is a good mix of businesses. But, you know, when you look at, for example, the underweight of of international investors to China, almost half from around two and a half percent in 2024 to 1.3% or so in in 2025. So this is a significant change on a year on year basis. And this is the main is the main driver. We continue to see a lot of activity around IPOs, particularly you saw the record high IPO issues last year in Hong Kong, which are probably going to stay with ourselves in 2026. We see a lot of activity across Asia inbound and outbound. I mentioned Japan is up three folds. So in general, I would say that you will continue to see momentum of, you know, Chinese investor investing abroad, but also, you know, capital coming into the country.
What's going to be your priority onshore for 2026? Last year you got the full 100% securities license. What's going to be the we are we are working on on all of this. We also like last year we also made a capital increase in in our local entities. And I think this year we are now planning to launch a panda bond in. And so I think that's we want to continue to foster, you know, our presence in China. We have been in China for mainland China for 35 years. We have been in Hong Kong for 60 years. So this is really part of our our core business. I mean, if you think about we are managing in the region that more than a trillion of assets, 800 plus in wealth management and 215 in asset management. So we want to continue to reinforce that position. But at the same time, our leading position in the investment bank across the board and where we are a leader in the region and in China, on mainland China particularly, and also in asset management through our very successful joint venture with ICBC.
What can you tell us about the arranging of that panda bond, the size and timing and the likes? This is still to be determined, but the decision has been taken to do so.
Kind of on the you still have some personnel issues on the cost reductions from the integration with Credit Suisse. Is that separate from what you're going to plan to hire across Asia and in China?
Yeah, look, when I look at Asia in general, the integration is over, is done. So I think that we completed the integration in 20 actually in 2024, mainly in Asia, across the board, the investment bank has been closed and asset management the same. So as I just mentioned, we are hiring both in China but broader are broadly speaking also and in in Asia. In Japan, for example, we have been expanding our capabilities and and leveraging really the complementarity of Credit Suisse and UBS together, where we not only have a broader footprint in terms of capabilities, but also of of geographic footprint.
How would you assess how your businesses in Asia are doing versus other regions, whether it's Europe or Asia? Is is has been growing, you know, very fast in the last year is probably the biggest engine of growth in nominal terms is accounting for around a quarter to 30% on average in the last five years of our profits. So as I mentioned, that we manage more than a trillion of assets out of the 7 trillion we manage globally. So it's a growing, steady, growing business, which when you look at the engine of growth is, well, GDP growth is definitely going to help. Four and a half percent in China is quite important, but it is a driver for growth in the entire region. We are selectively gaining some market shares in areas where we want to compete. And last but not least, this monetization, this IPO calendar is very important to our wealth management business because this is really helping us to drive many mining and new assets into our wealth management franchise.
Well, speaking of that IPO pipeline in Hong Kong, it's been quite strong. A lot of the new economy companies. But there are also concerns that the new economy companies, whether it's Mini Max or others, that profitability, just like the companies in the United States and Western markets, that sustainability is not necessarily it doesn't have a lot of visibility. But what's your views on whether we're in a bubble and how long that potentially could still last?
I don't know if we are in a bubble or not, but of course, when you see this kind of multiples and and and performance is you have to ask yourself, is this a repeat of what we saw in maybe in an older time in 2001. Exactly. The TMT bubble and so on and so forth. I would say that in general, you know, first of all, our advice is very clear diversification, no concentration of risk around the sector, the technology and and is here to stay. And what we should not really makes the two issues from an investor stand point of view is very important to diversify, not to get into a trap of trying to pick up the right, the winner or the loser. But and that's, you know, the truth of the matter is that the first wave was probably around the technology sector. Now we're going to see how embracing and implementing AI can help other parts of the economy become more vibrant and more efficient. And that's probably going to be also the next side of the story.
You also have to you can't discount the fact that most of the deal flows right now are in China. The interest is in these new economy companies. So could you kind of quantify that the type of deal flows, whether it's underwriting or other types of businesses or services from the your bank is are tied directly to what has been a priority of central government policymakers here?
Well, look, you know, but, you know, this is something that is not really new. I mean, the priorities for the central government on around innovation are being in technology or or pharma, biotech and so on, has been there for a while. So from our standpoint of view, what we are helping is, you know, local clients, but also foreign clients to really select the winners. I think it's quite impressive how the Chinese companies are able not only to be a fast follower, but in some cases setting new standards for incumbents and that in the U.S.. So from my standpoint of view that this is a big story to stay with us, where we're going to see probably Chinese companies, you know, creating new frontiers of innovation rather than being a follow.
You've mentioned Japan twice already in the last six or 7 minutes. What do you like about the Japanese story right now? Obviously, that the market's doing really well. There are some pro-growth policies from taking inches on the new prime minister. What what in particular do you like about Japan?
Well, I have to say, before year end, I was in Japan. And after 30 years of, you know, I fell for the first time a renewed sense of optimism across the board. And, you know, corporates, institutional investor governments, regulatory bodies and looking at, you know, in a much more positive ways about the future. So I think Japan is the third largest wealth management market in the world in terms of savings. And it's quite clear to me that now that rates are coming up and, you know, there is a new paradigm that is there to stay with us and that I do believe that's also there you will see Japanese corporates probably looking to deploy more assets outside Japan, but also a renewed interest from foreign investors into Japan.
Where specifically would you like to grow in Japan and what kind of hiring you were talking about? Maybe 100 new positions here in China. What about Japan?
Well, across the board in our core businesses, I mean, I would say just outside Switzerland, I mean, the structure of the three core activities, the wealth management, and we have a very successful joint venture with Sumitomo Mitsui Trust Bank. And that is growing. And we want to foster more in the investment bank, of course, in the investment banking and in ECM and M&A and reinforcing our presence in equities and in research where we are a leader in generally in Asia. And last but not least, in the asset management business.
Let's talk about the overall integration with Credit Suisse. You mentioned that in this part of the world and in China, that integration pretty much was completed last year. And you've also said to us, I think in September that the overall integration will be completed by the end of this current calendar first quarter. What are the biggest hurdles to overcome right now?
I you know, it integration is going to be a big one, but also there's going to be some personnel issues that you have to resolve as you go through those cost cutting. You know, so what are we going to do by around by the end of this first quarter? Are we going to migrate the balance of around 15% of the clients in Switzerland into the UBS platform at that point in time? All clients globally will be in on on our UBS system right on the UBS platform. Then we're going to start to shut IT centers and data centers. And, you know, the fact in Switzerland, we are still you know, we are still maintaining and running two separate IT systems. So shutting down that one will create the synergies, real estate footprint and and to some extent, unfortunately, also some personnel reduction that will continue to stay within what we announced In terms of proactive redundancy, we believe we can manage that below 3000 redundancies between now and the early part of 2027.
And where do we stand? Do you have any kind of update right now what the bank's perspective is on? Of course, the too big to fail regulation and some of the proposals from the Swiss government as far as capital requirements?
Well, this is really an important steps together with finishing the integration. I think that's what I just mentioned, you know, the process of completing the integration and finalizing this very big work because, of course, that is also painful because, as I mentioned, we need to, I think, also go to redundancies. But what we want to set is the scene for growth to be able to, you know, to hire again and growth. And in that sense, in order to be able to growth, we have we need a competitive regulatory framework. Right. And what we we fully understand the necessity of taking the lessons learned from what happened at Credit Suisse. But we believe that the current proposals are not really reflecting what happened at Credit Suisse and that are going too far. And therefore, we are contributing in the debate with our views on the matter. And but this is now a political process. We we hope we're going to get more clarity in the second by the second half of the year, second half of the year.
Are there compromises that you would potentially accept and that conditions of doing business? Is is it a hindrance, obviously, to be still domiciled in Switzerland?
Oh, look, you know, first of all, there is a compromise is usually between two people, you know, negotiating something. We are not in a negotiation. There is a political process and therefore, we need to see what's coming out. As I say, our role right now is to make sure on behalf of our shareholders, our employees, our clients, and in general to the public that we contribute our views on the matter. But, you know, we want we are we are a Swiss bank. We are very proud to be a Swiss bank. Is that we believe that is is a is a is a differentiating factor. We believe this is good for Switzerland and we want to continue to operate as a Swiss bank. So it's not necessarily compromise because, as you said, that would be a negotiation. Right.
But are you confident that they will come up and there will be a resolution that will be acceptable to UBS?
I cannot be confident about that. I think that I am I am pleased to see that there is a political interest to go deeper and fully understand the details of this is very important to understand the details of what's going on. So such an important decision cannot be taken out of emotions or by the people trying to drive the agenda by fear.
How would you. What are your opportunities do you see in the United States? Obviously, your chairman has talked to Scott Besson and there was massive market rumors that was possibly about discussing moving to the United States. But we also know that Mr. Kelleher wants to boost wealth management in the United States. What are the opportunities there?
Well, first of all, I have to say that we are in a regular dialogue with that many key stakeholders around the world and governments regulatory framework regularly. So there is nothing exceptional when we speak with one or the other officials. So but of course, the U.S., together with this region and China, are likely to continue to be two engines of growth. It's very important for us to continue to be a competitive and presence in the U.S. like we want to continue to be strong in Asia and in our own country, Switzerland.