UBS ends collaboration on Aladdin platform with BlackRock

UBS Group, the Swiss banking giant, has announced that it has terminated its contract with BlackRock's Aladdin technology platform. This decision, made earlier this year, is part of UBS's ongoing integration of the asset management operations of Credit Suisse.

The Aladdin contract, which began in 2019, was inherited from Credit Suisse. Since its inception, the contract generated revenue estimated between SFr50m and SFr100m (approximately $126m). The annual revenue of BlackRock's technology services division, which includes Aladdin, has increased by 45% to $1.6bn from 2020 to 2024.

The termination of the contract is a crucial step in UBS's efforts to streamline its operations following the acquisition of Credit Suisse. The bank restructured its leadership to achieve this goal, with Aleksandar Ivanovic assuming leadership of UBS's asset management division in January 2022. The removal of outdated IT and associated infrastructure is essential for enhancing shareholder value, according to UBS management.

UBS's asset management division is facing challenges due to declining revenues linked to reduced management fees. The division, which manages assets totalling $1.8tn, reported a pretax profit of $135m for the first quarter of the year. To address these challenges, UBS is currently in the process of transferring key components, including numerous Credit Suisse funds, to its own systems.

The bank aims to complete this transition by the end of the current year. The decision to end the contract with BlackRock's Aladdin technology platform, however, does not seem to be related to performance issues. No new information about the reasons for the termination was provided.

BlackRock's CEO Larry Fink has prioritised technology in his strategy for the firm. The company's technology services division, which includes Aladdin, is looking to expand beyond public markets. Aladdin offers trading, risk management, and portfolio management tools widely utilised by major money managers, pension funds, and corporate treasurers.

Despite the termination of the contract, UBS's CEO, Axel A. Weber, remains committed to leveraging technology to drive growth and efficiency in the bank's operations. The move marks a significant step in UBS's integration of Credit Suisse's operations and its ongoing quest to optimise its technology infrastructure.