In the highly competitive landscape of financial services, professional service titan Ernst & Young (EY) has landed an exceptional contract to audit UBS, the Swiss multinational investment bank and financial services company.
EY is taking over from PricewaterhouseCoopers (PwC), following UBS’s recent acquisition of Credit Suisse.
A change in guard for UBS: From PwC to EY
EY has had a long-standing relationship with UBS, serving as the bank’s external auditor since 1998. As UBS integrates Credit Suisse into its operations—a process that experts predict will span several years—EY will begin auditing the enlarged entity from 2024.
This is one of the world’s most substantial banking audit contracts, so much so that EY is expected to draw upon its international workforce to fulfill the demands of this assignment. Although PwC has been Credit Suisse’s auditor, they will wrap up their involvement by auditing the bank’s 2023 accounts.
In the grand scheme of the world’s financial services, this auditing contract marks an impressive win for EY. The sum that UBS paid to EY for auditing in the previous year amounted to $70 million, while Credit Suisse paid PwC $90 million—a ten percent increase from the prior year.
These hefty payouts reflect the value and prestige of these audit assignments in the European market. However, for the merged UBS-Credit Suisse entity, the audit fee is anticipated to be less than the combined amount paid by the two banks separately.
Nevertheless, it still ranks among the highest audit fees in the global banking arena.
To put these numbers in perspective, HSBC paid PwC $148 million for auditing last year, and Barclays paid KPMG £71 million. The auditing fees of the Wall Street heavyweights—Citigroup, JPMorgan Chase, and Goldman Sachs—ranged between $95 million and $103 million.
EY’s global edge and recent triumphs
The global reach and integration of EY’s financial services audit practice enable the firm to harness resources and specialized skills from across its network. This arrangement is said to be more seamless compared to EY’s competitors, allowing the firm to easily share resources across borders.
This UBS audit contract reaffirms EY’s position as a dominant player in the European market for financial services auditing. Last year, the firm won a share of the €60 million-a-year audit contract of BNP Paribas, France’s largest bank. EY also serves as the auditor for Deutsche Bank, Germany’s most substantial lender.
These recent successes have come despite EY facing reputation damage from its involvement in the Wirecard scandal. However, EY has demonstrated resilience, showcasing its ability to continue winning substantial contracts in the face of adversity.
As EY gears up for this high-stakes audit assignment, it may have to discontinue its consulting services for Credit Suisse, adhering to conflict of interest regulations. The firm was previously hired by Credit Suisse to review anti-money laundering procedures in its Asian wealth business.
The Swiss Federal Audit Oversight Authority, when questioned about EY’s independence as an auditor for the unified UBS-Credit Suisse entity, chose not to comment as the matter is currently “under consideration”.
In a world where credibility and expertise are the cornerstones of success in financial services, EY’s new auditing contract with UBS affirms its position in the big leagues of global auditing.
With this venture, EY not only elevates its standing but also sets the stage for its continued growth in the audit sector of financial services.
