UBS Reworks Super-Rich Unit
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UBS continues to tussle with how to cater to the lucrative super-rich tier: the bank is planning changes for the $1 trillion business led by top banker Josef Stadler.
The Swiss-based wealth manager is whittling its ultra-high net worth business, a move which will dramatically curb the influence of unit head Josef «Joe» Stadler, a source familiar with the matter said.
Specifically, UBS will disperse some of its super-rich and family office clients back into the regions, the person said. Stadler will maintain a percentage of the total clients and take over an as-yet-unnamed new unit, they said.
The so-called ultra-high net worth unit is at the center of UBS’ private banking play. The move is the first to emerge since a sixty-day «grace period» imposed on new unit co-head Iqbal Khan by CEO Sergio Ermotti lapsed. Khan runs UBS’ $2.3 trillion wider wealth management arm, together with Tom Naratil.
The 43-year-old Khan «doesn’t care for too many segments,» the person familiar with the move said. In practice, this means that simply being super-rich won’t get you the free shmoozing and perks that are common in wooing this segment, the person said.
Largest Wealth Custodian?
While the super-rich segment has won substantial new funds, UBS frets that not all of it is as lucrative as it hoped – some clients use UBS solely for trading or execution, which isn’t a lucrative business for the bank.
“Specifically, UBS will disperse some of its super-rich and family office clients back into the regions, the person said.”
Khan is battling against UBS becoming the world’s largest custodian of assets – as opposed to an active wealth manager, earning fees and commissions based on its advice.
In the future, clients will only command the luxe service if they truly draw the sophisticated (and pricey) services that UBS wants to put at their disposal. The reversal undermines Stadler, who had emerged as hugely influential in a mega-merger, overseeing more than $1 trillion in assets at the end of last year.
Most notably, Stadler and his team won entry into the U.S. wealth market, where UBS is scaling its way up the ladder in a bid to win wealthier clients and families with least $50 million). Stadler launched a U.S. capital markets team for the super-rich push under long-time investment banker Reinhardt Olsen several months ago.
But Stadler’s efforts are constantly accompanied by turf wars: he clashed over territory with Europe boss Christine Novakovic. The reorganization in the super-rich segment hands considerable influence back to Novakovic, to Asian wealth co-heads Amy Lo and August Hatecke, and to U.S. boss Jason Chandler.
UBS plans to cut as much as 5 percent of staff as a result of the move, «Inside Paradeplatz» reported, citing bank insiders. Stalder oversees more than 1,000 private bankers. The segment is the second-costliest to operate, after the Americas: its cost-income ratio is 76 percent, just under the wider private bank’s 77 percent total in the third quarter.
Questions & Answers
Q.What is the primary reason for UBS to re-evaluate its approach to super-rich clients?
What is the primary reason for UBS to re-evaluate its approach to super-rich clients?
UBS is concerned that not all super-rich clients are as lucrative as hoped, with some using the bank solely for less profitable trading or execution services. The bank aims to earn more fees and commissions from active wealth management advice.
Q.How will the changes affect Josef Stadler's role within UBS?
How will the changes affect Josef Stadler's role within UBS?
The changes will dramatically curb Stadler's influence, dispersing many of his clients back into regions. He will maintain a percentage of clients and take over a new, as-yet-unnamed unit.
Q.Which other UBS executives will see their influence increase due to this reorganisation?
Which other UBS executives will see their influence increase due to this reorganisation?
The reorganisation hands considerable influence back to Europe boss Christine Novakovic, Asian wealth co-heads Amy Lo and August Hatecke, and U.S. Boss Jason Chandler.
Q.How will these changes affect the service level for super-rich clients?
How will these changes affect the service level for super-rich clients?
Clients will only receive the top-tier service if they utilise the sophisticated and pricey services UBS wants to provide. Simply being super-rich will no longer guarantee free perks or 'shmoozing'.