UBS' asset management arm is struggling to hit its mid-term targets. Now, the Swiss bank is weighing a sale of a business-to-business fund platform, finews.asia has learned.
Zurich-based UBS operates a platform for third-party funds, «Fondcenter,» which offers more than 240 distribution partners, including banks, insurers in Switzerland, Europe and Asia an open architecture to more than 335 fund providers.
Fondcenter is the largest third-party platform by far, and second to rival Allfunds in Europe.
Several people familiar with the matter tell finews.com that UBS is considering selling Fondcenter. Talks of varying degrees of seriousness have been taking place for roughly the past year, one of the people said.
Asked for comment, UBS told finews.asia that it isn't currently discussing a sale of the platform.
Asset Management Under Pressure
The sales speculation isn't surprising: UBS' asset management faces headwinds against industry giants, just as the bolt-on divisions at many major banks do.
Unit head Ulrich Koerners ambition is to build the money management unit into one to rival the larger private banking and investment banking ones. However, Koerner has struggled to reach profit targets despite heavy cost-cutting.
To succeed in asset management, banks have been slashing their spending but also specializing in niches while spinning off, selling or winding down the type of me-too products that they cannot excel at.
Allfunds Offload
This is the backdrop of UBS' recent sale of its fund administration unit to U.S. rival Northern Trust. In March, Spain's Santander and Intesa SanPaolo of Italy decided to sell their stake in Allfunds to Singapore's sovereign wealth fund GIC and financial investor Hellmann & Friedmann for 1.8 billion.
Both banks offloaded the stake in order to focus on their core business and to bolster their capital.
Europe's largest third-party fund platform, Allfunds Bank manages 256 billion euros in assets and operates with 500 fund managers.
The people familiar with the matter said that Allfunds is a potential buyer for Fondcenter. Allfunds bank has an office in Zurich, but has had trouble taking root in the Swiss market, one of the people said.
Consolidation Ahead?
UBS Fondcenter commands roughly 80 percent of the Swiss market, and has a strong presence in Europe and Asia – a strong proposition for Allfunds.
Third-party platforms are poised to consolidate, in part as requirements stiffen. Regulators have put the kibosh on the formerly lucrative business with hidden distribution commissions on funds – so-called retrocessions.
Upcoming regulation such as the second version of MiFID and a collective investment scheme law are making the fund business more complicated, and more expensive as a result. Most platforms are finding it difficult to eke a profit out of simply fees, after retrocessions have fallen away and as spending on regulation increases.
As a result, Intesa and Santander's dumping of the business is being closely watched at UBS.
