(Bloomberg) -- UBS Group AG is setting aside hundreds of millions of dollars of its own money to invest in fintech companies, joining peers in financing startups that are upending traditional banking.The Swiss wealth manager is planning a corporate venture capital fund to make investments between $10 million and $20 million in dozens of companies, according to a person familiar with the matter. UBS plans to hold the stakes for at least five years, the person said, asking for anonymity because details haven’t been finalized.A UBS spokeswoman confirmed the bank is starting such a fund, while declining to comment on specifics.The venture fund comes just months after UBS named ING Groep NV’s Ralph Hamers, an outspoken champion of digital banking, to succeed Sergio Ermotti as chief executive officer from October. While wealth management -- UBS’s biggest business -- is traditionally a high-touch operation, with clients valuing personal contact, the coronavirus pandemic has accelerated a shift toward digital services.“UBS wants to further engage with and support fintech firms,” said Mike Dargan, UBS’s Global Head Group Technology. “The new venture investment portfolio is a next step to accelerate our innovation and digitization efforts.”Read more: UBS Names Outsider Hamers to Succeed CEO ErmottiThe new fund will look at three broad categories to invest in: client engagement, investing and financing platforms, and improving underlying operations of the bank. While it is already screening potential investments, the bank is still in the process of hiring a team dedicated to run the fund, the people said.More digital tools are a key part of a revamp plan for UBS’s wealth unit unveiled earlier this year. The bank wants to use them to save time on administrative tasks and cut costs, as competition for rich clients and a flight to cheaper, passive investment products erode profitability.Globally, U.S. banks have been at the forefront of spending on fintech, according to Bloomberg Intelligence. The firms are generally more profitable and can afford to plow large sums into such efforts. UBS’s Zurich rival Credit Suisse Group AG invests in fintech through its entrepreneur capital arm.U.S. Big Banks Drive Virtuous Cycle With Tech SpendingUBS is also looking to use technology to make inroads in the Chinese wealth market. The bank is in the process of acquiring a digital fund distribution license, which would provide a plain-vanilla fund offering to rich Chinese customers. Over time, UBS plans to use such a digital license to move into advisory and on-boarding of new wealth clients, according to Edmund Koh, UBS’s head for the Asia Pacific region.A previous effort by UBS in this area flopped. A 2017 internal project in the U.K. called SmartWealth was shut down a year later.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

(Bloomberg) -- The Bank of England is studying how low U.K. interest rates can be cut amid the coronavirus crisis and isn’t excluding the idea of taking borrowing costs below zero, according to Governor Andrew Bailey.“Given what we’ve done in past few weeks, it should come as no surprise to learn that of course, we’re keeping the tools under active review in the current situation,” Bailey told lawmakers on Wednesday when asked about negative rates. “We do not rule things out as a matter of principle. That would be a foolish thing to do. That doesn’t mean we rule things in either.”The comments come amid a growing debate about the possibility of negative interest rates in the U.K., which intensified Wednesday after a report showed inflation slowed to the lowest level since 2016 and the nation sold debt with a sub-zero yield for the first time. Bailey said his position on going below zero had changed since entering the pandemic, but the policy had received “pretty mixed reviews” elsewhere.While officials have repeatedly emphasized such a move isn’t imminent, and would be tricky to implement in the U.K., they’ve also stressed nothing is off the table in their efforts to fight the impact of coronavirus. The fallout could push the economy into the deepest recession in three centuries.Interest-rate swaps, which are used to gauge where the benchmark may be, are just below 0% for December, and get progressively lower in 2021.Still, a full 10 basis-point cut below zero is yet to be fully priced in. That means that rather than outright bets on a negative rate, those moves might represent traders hedging against the prospect of a worsening economic situation making easier policy more likely.“In investors’ minds even a small probability of negative interest rates in the dollar and pound is a big change”, said Antoine Bouvet, rates strategist at ING Groep NV. “That the possibility remains open, even if small, and might cause some investors to pre-hedge.”Read More:U.K. Inflation Rate Drops Below 1% Amid Negative Rate Debate Negative Interest Rates Are Last on BOE List, Barclays SaysU.K.’s First Negative-Yielding Bond Sale Fuels Debate Over RatesBailey said the BOE was keen to observe the impact of its previous U.K. rate cuts, bearing in mind arguments that they become less effective the closer to zero they are. It’s also examining the experience of other central banks that have cut below zero, he said, adding the financial system in an economy is an important factor.The governor has previously expressed a stronger opposition than other policy makers to the tool, saying they would present a communications challenge and prove difficult for banks. Others have been more sanguine, with Silvana Tenreyro saying they’ve had a positive effect elsewhere and Chief Economist Andy Haldane noting they were something officials were examining among other unconventional tools.Cutting interest rates below zero is the last policy option that BOE officials would currently choose to further stimulate the economy, according to Barclays, which sees more asset purchases as the most likely next step.What Our Economists Say:“Would negative rates really be a game changer if the economy needed a lift? Probably not. The reality is the BOE is at the limits of its powers to boost spending. If demand did need a lift further down the line, we think a more potent policy mix would be for the BOE to continue with QE while fiscal policy does the heavy lifting.”\-- Dan Hanson, U.K. economistAnother side effect would be to further weaken an already beleaguered pound, making imports more expensive. While exports would typically get a boost, the impact of the pandemic on trade means that’s less likely this time.“I can’t think of an economy where negative rates are a worse idea than the U.K.,” wrote Kit Juckes, a strategist at Societe Generale. “How on earth does it make sense to even consider adding negative rates to the mix?”(Adds further comments from Bailey in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.