UBS had 2 multi-billion-dollar clients pull their money out of its massive Americas wealth business, driving overall fourth-quarter outflows
- Two large UBS clients withdrew money from the bank's wealth management arm in the Americas during the fourth quarter. One of the clients had an account between $3 billion and $4 billion, while the other was between $1 billion and $2 billion, a person familiar with the matter said.
- Those outflows helped explain the bulk of the overall unit's $4.7 billion fourth-quarter outflows that the Swiss bank reported in its earnings on Tuesday.
- The wealth management unit's adviser force meanwhile shrank again. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier.
- Visit BI Prime for more wealth management stories.
Two ultra-wealthy clients pulled money out of UBS wealth business in the Americas late last year, driving the lion's share of a global $4.7 billion in outflows from the bank's wealth management arm during the fourth quarter, according to a person familiar with the matter.
One of the clients had an account between $3 billion and $4 billion, and one was between $1 billion and $2 billion, according to the person, who requested anonymity to discuss a private matter.
The Swiss bank's wealth management business, which is the world's largest, reported its Asia-Pacific and Switzerland regions had net inflows, finance chief Kirt Gardner said on a call to discuss earnings with analysts early Tuesday.
Those two Americas clients were "very low-margin accounts," Gardner said, suggesting they were not accounts that were immediately profitable to the business. He highlighted that full-year net new money of $31 billion was "particularly strong" into Asia-Pacific, a region where the wealth management unit hopes to expand.
In the third quarter, net new money for the unit totaled $15.7 billion.
Global wealth management - one of the bank's four business lines along with personal and corporate banking, asset management, and investment banking - has been a main focus under chief executive Sergio Ermotti and wealth co-heads Tom Naratil and Iqbal Khan.
Khan, who joined last year from Swiss competitor Credit Suisse, and Naratil are aiming to increase the unit's efficiency through a broad business reorganization across regions.
UBS has long been a leader in managing money of the world's ultra-wealthy clients, and has more recently emerged as the firm's more stable business while its investment bank struggles.
The firm earlier this month said it was overhauling its global wealth management division with structural changes across regions, according to a company memo reviewed by Business Insider, after similar changes were made in the US.
It's all an effort to expand its menu of specialized client offerings, particularly bespoke family office services, and speed up advisers' decision-making and productivity through a closer relationship with investment banking. It was widely reported earlier this month that the unit would slash hundreds of jobs to cut costs.
On the firm's Tuesday call, Gardner called the global family office group "one of our highest-growth opportunities" for the wealth management unit.
The wealth management unit's adviser force meanwhile shrank again during the fourth quarter. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier.
Overall staff within the business fell by 4% to 22,681 employees.
Some large adviser teams, some of whom oversaw $1 billion or more, left the firm last year for smaller shops or rival firms. Peer US wealth managers Wells Fargo, Merrill Lynch, and Morgan Stanley have all seen similar exits.
One UBS team managing some $7.5 billion in assets left to join RBC Wealth Management in California last month, and earlier in 2019 a team overseeing $1 billion in client assets left for Rockefeller Capital Management.
UBS has meanwhile made some notable US recruits, including a large North Carolina-based private wealth team, formerly with Merrill Lynch. The team oversees some $10.8 billion in client assets.
As Business Insider reported over the summer, UBS has pulled together a new group to help its wealth advisers provide a "family-office"-like experience, and that comes as the bank works to make good on raking in $70 billion in new US assets over three years.
