UBS is preparing to tell investors it wants to attract more coveted super-rich clientele, preferably in the U.S. The implementation of this strategy may make another of the bank’s convictions hard to maintain.
Switzerland’s largest bank for quite some time has dedicated much of its attention to the richest clients in private banking. The bank sees the biggest growth potential among customers worth at least 50 million Swiss francs ($50 million).
The strategy stands to be reiterated at the bank’s investor event later on Thursday, according to the «Financial Times» (behind paywall). Rich Americans are the prime targets for the private bankers from Zurich.
A Profitable Business
The second-quarter figures showed why this clientele is coveted so much: they are the source of more than half of invested assets at the bank. And yet, at UBS only 10 percent of its wealth managers is working with such clients.
The rich customers generate revenue at the global wealth management division, but they also use the investment bank and asset management to make their – at times – complex transactions.
Promoting Own Talent vs Poaching
The reiteration of this strategy however makes it hard to follow through with what Tom Naratil, the co-head of global wealth management, had defined as a conviction. UBS will have to hire high-profile relationship managers to chase the rich.
Naratil had gone public saying that the eternal and expensive merry-go-round of private bankers should end and that UBS would promote its own talent instead. The salaries of the U.S. brokers are one of the reasons why the profitability of the wealth management isn’t quite what it could be.
Not So New
Of course, independent of how Naratil and his colleague, Martin Blessing, aim to achieve the targets issued by their boss, CEO Sergio Ermotti, the focus on the ultra-high net worth individuals isn’t going to engender much enthusiasm among investors.
The business with the rich had become a central theme back when Joe Stadler had taken over the global unit and which helped him gain in stature within the bank over the past years.
Global Reach
The global reach of the Swiss bank, testimony to the combination in one unit, helps UBS competing with the U.S. players. Most other competitors in the biggest financial market can’t trump the network of UBS.
The bank also wants to put an end to any lingering bad feeling from the tax dispute that had proved such a dominant theme in banking with the U.S., according to the «Financial Times». UBS plans to launch a new global offering for the wealthy American clientele.
