UBS Has Relationship With 80% of Asia’s Billionaires

UBS Has Relationship With 80% of Asia’s Billionaires

UBS AG (UBSN), the Swiss lender that’s shrinking its investment banking business to focus on wealth management, said it has a business relationship with as many as eight out of 10 billionaires in Asia. “We have a penetration of one in two billionaires in the world,” Chief Executive Officer Sergio Ermotti told analysts and reporters on a call after second-quarter earnings today. “In Asia, this was much deeper.” The Zurich-based bank has a relationship with as many as 80 percent of the billionaires in Asia, a UBS official said in an e-mail following the call. UBS is targeting affluent clients in emerging markets as indebted economies and a crackdown on offshore tax evasion cloud European growth prospects. Switzerland’s largest bank, ranked No. 1 globally by client assets by Scorpio Partnership, is boosting business with ultra-wealthy families with at least 50 million francs ($54 million) of investable assets.The lender posted preliminary first-half earnings last week that beat analysts’ estimates, even as it booked charges tied to an $885 million settlement with the U.S. Federal Housing Finance Agency over mortgage-backed bond sales. Pretax earnings at the wealth-management division for customers outside the Americas rose 11 percent to 557 million francs, the company added today in a more detailed quarterly filing.

That unit attracted 10.1 billion francs in net new money, with emerging markets and the Asia-Pacific regions driving growth, and the most money coming from so-called ultra-high-net-worth individuals.

‘Clear Trend’

The wealth-management business in the Americas added 2.7 billion francs in net new funds, boosting assets under management worldwide to more than 1.7 trillion francs at the end of June, compared with 1.4 trillion francs two years earlier.

“Our growth in the last 10 quarters since 2011 has been clearly above market trends,” Ermotti said on the call. “We are gaining back not only share of wallet with existing clients but also more and more we can see a clear trend in the last two quarters of new clients coming on board.”

UBS overtook Bank of America Corp. to the top a ranking as it benefited from clients invested in emerging markets, London-based Scorpio said on July 10. Global wealth management assets rose 8.7 percent to $18.5 trillion last year, helped by a 24 percent increase in net new money and market gains, according to the report, which placed U.S. lenders Wells Fargo & Co. (WFC) and Morgan Stanley (MS) in third and fourth place respectively.

Zurich-based Credit Suisse Group AG, Switzerland’s second-biggest wealth manager, was fifth.

‘Compelling Prospects’

UBS reported today for the first time how much money it makes on assets of ultra-high-net-worth clients. The bank said the super-rich segment has “compelling economics and growth prospects,” as the lower costs of running the business make up for a weaker margin on assets under management.

The bank said its net margin on ultra-high-net-worth assets, which amounted to 394 billion francs at the end of June, was 24 basis points, compared with 40 basis points for other clients. The ratio of pretax profit to revenue was 43 percent for the wealthiest, compared with 33 percent for others.

UBS’s wealth management unit reported a 1 basis point decrease in gross margin, which reflects how much revenue the bank makes on assets it oversees, to 90 basis points from 91 basis points in the first quarter.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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