UBS loses record Assets and Advisors
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Americas reported today that clients withdrew CHF 5.8 billion ($5.5
billion) of their assets from the unit in the second quarter. Overall,
the Americas unit reported a pre-tax loss of CHF 221 million ($209
million). This is still a vast improvement over the same quarter last
year, when the unit posted a record loss of CHF 748 million ($705
million) largely due to the expense of repurchasing auction-rate
securities from clients.
The outflows of client assets were even worse for the firm’s wealth management business in the rest of the world. The Wealth Management and Swiss Bank division saw outflows of CHF 16.5 billion ($15.6 billion). However, it did post a pre-tax profit of CHF 932 million ($880 million), down 50% from a year earlier.
UBS also lost 821 advisors, or almost 10% of its advisor force, in its Americas unit over the quarter. The firm says that the reduction “reflects, in part, planned reductions of lower producing financial advisors.” This is in contrast to its first quarter results, when the unit attracted 153 advisors, as well as $14.3 billion in client assets, with big recruitment packages. The firm says it is continuing to attract “highly productive financial advisors” but acknowledges the pace of recruitment has slowed.
Alois Pirker, research director at Aite Group, says that some of the advisors who left may be lower producers, “but the reduction in advisors has gone hand in hand with the reduction in assets, which points to higher producing advisors (also) leaving and taking their assets with them.”
Pirker also blames the outflow of assets in the global business on the U.S. Justice Department’s investigation into UBS’s offshore banking business. “Not only is the outflow severe, it will be very difficult for UBS to regain or replace these assets, unless the settlement with U.S. authorities allows it to convince its international clients that the firm continues to be a reliable partner for them,” Pirker said in a statement.
Last Friday, the firm announced that the U.S. and Swiss governments had reached an agreement on the case. A status conference is scheduled for August 7 to work out the details of the settlement.
Overall, UBS recorded a second quarter loss of CHF 1.4 billion ($1.3 billion), an increase from the CHF 395 million ($372 million) loss it reported a year earlier.
</div> </div>Pirker also blames the outflow of assets in the global business on
the U.S. Justice Department’s investigation into UBS’s offshore banking
business. “Not only is the outflow severe, it will be very difficult
for UBS to regain or replace these assets, unless the settlement with
U.S. authorities allows it to convince its international clients that
the firm continues to be a reliable partner for them,” Pirker said in a
statement.
And IF the settlement does not go well??? What’s next, 20% leaving in the next quarter?
Reliable...as in...complicit in tax evasion?Pirker also blames the outflow of assets in the global business on the U.S. Justice Department’s investigation into UBS’s offshore banking business. “Not only is the outflow severe, it will be very difficult for UBS to regain or replace these assets, unless the settlement with U.S. authorities allows it to convince its international clients that the firm continues to be a reliable partner for them,” Pirker said in a statement.
And IF the settlement does not go well??? What’s next, 20% leaving in the next quarter?
[quote=SometimesNowhere]Holy crap…UBS has just become the GM of financial services world.
Yes, but at least they are not picking tax payers pockets like Citi-morg, and BOA. What kind of an idiot would stay at one of these crap holes?This from FORBES today… even a more negative view.
<span =“artsectiontitle”>Private Banking
<span =“mainarttitle”>UBS: The Good Days Are Gone
<span =“mainartauthor”>Parmy Olson, <span =“mainartdate”>08.04.09,
12:20 PM ETLONDON -
UBS
might be lagging behind its European peers in banking, but it still
manages a lot of the world’s wealth: The Swiss bank looks after 1.65
trillion Swiss francs ($1.55 trillion) worth of assets for private
individuals worldwide.
Yet that number is in constant flux now that private banking clients from the U.S. and Europe are getting spooked by its ongoing case with the Department of Justice over allegedly helping Americans evade taxes.
Swiss media reports say UBS, which has 71,800 employees and a market capitalization of $39 billion, may reach a settlement with the U.S. in which it will hand over 5,000 client names who are most heavily suspected of tax evasion. Though that's a lot less than the 52,000 or so that the Department of Justice is demanding, even that concession will likely have a long-term, damaging effect on the bank's crucial reputation for secrecy.
"Each time we have huge media coverage on this issues, this has a direct impact on our net new money because people get concerned," said a UBS spokesman. "The clients are now not sure what is going on."
So what to do? UBS could take advantage of the fact that its Swiss-domiciled clients have no such concerns about having their details handed over to the state. There was a marked slowdown in outflows from UBS' Swiss-domiciled private banking clients in its second quarter results on Tuesday. (See "UBS Plays The Confidence Game.")
Of the $1.55 trillion in private banking assets that UBS manages, some 328 billion Swiss francs ($309 billion) or around 20% of that is from people who are domiciled in Switzerland, a hefty chunk. Marco Bider, a Swiss fund manager who owns shares in UBS, thinks the firm ought to seek out more private banking clients who have permanent residence in Switzerland, where the global crackdown on tax evasion from the likes of the G20 and G8 have not had an impact.
Yet even while Switzerland is teeming with wealthy individuals, that market is already heavily saturated by both UBS and arch rival Credit Suisse. The bank's biggest deposits still come from its U.S. private banking division, which accounts for 695 billion Swiss francs ($655 billion) under management, and UBS' international operations (including Europe and Asia) which account for 633 billion Swiss francs ($597 billion), according to the spokesman.
UBS' chief executive, Oswald Gruebel, even admitted on Tuesday that the market would see "less growth in European offshore private banking for the foreseeable future."
"There's just no way you can cut this and believe this is a positive for the business," said Fox-Pitt, Kelton analyst David Williams of the IRS case. "UBS is going to have to step up their compliance regime to ensure that its clients are fully compliant with their laws domestic situation and any other jurisdiction with which they come into contact."
Gruebel had said during a conference call on Tuesday that protection of the bank's reputation was "a cornerstone of future strategic direction, and it includes deep and inevitable commitment to strict legal compliance." He added that UBS would be able to win back the trust of clients and shareholders by better integrating the bank's divisions and improving its reputation. UBS could turn around if it could build "reliable clients within earning streams."
For UBS to find clients that are reliable, though, it needs to appear reliable and trustworthy itself with their data. So long as there is the threat that it will have to hand over client data to governments like the U.S., it may be all but impossible to regain the same kind of trust it once enjoyed.
my guess is that $5.5 billion outflow isn’t a hair on BofA’s a$$ as to the outflows. we lost 10% of our workforce because many were walked to the door (over 10% of my office were fired).
also, do you have a link to this story? would appreciate…I love how it questions everyone in the industry about why the outflows instead of someone who actually might know.
leh wb mer bsr aig fnm fre beat em to itHoly crap…UBS has just become the GM of financial services world.
It would be interesting to know if the outflows of advisors and assets included the branches that were sold to Stifel.
I believe that it includes the 600 they laid off but not the 350 that were sold to Stifel.
s and p is 1120
fees up
they generating enough revenue to stay out of red.
mccanngreat white hope
swiss seem to understand that their elite socialist crap does’nt work