22/01/18

UBS to merge US and international wealth management divisions

(Investment Week) -- UBS announced today that it will merge its American and international wealth businesses into a new division called Global Wealth Management, with effect from 1 February.

The group highlighted it began to more closely align the businesses two years ago and said it has made good progress  converging the Chief Investment Office (CIO), UHNW and Global Family Office (GFO) segments into global organizations.

It described combining the wealth divisions as "the natural next step in the evolution of the wealth management franchise".

UBS said the combined business will enable the bank to "more effectively leverage the purchasing power of its CHF 2.3trn invested asset base and realize greater synergies across technology, innovation and other areas of investment".

It said regional variations in the client service model will be maintained, while middle- and back-office functions will be more closely aligned and integrated.

The combined unit will have two co-presidents; Martin Blessing, the head of the current wealth management unit, and Tom Naratil, president of UBS Americas.

Group CEO Sergio P. Ermotti commented: "In the last few years, we transformed our wealth management businesses, adapting to a new paradigm while adding CHF 1.0bn in adjusted1 profits since 2011.

"Two years ago, we began to more closely align the divisions, and today's announcement reflects our continued evolution. It will mean improved efficiency, more sharing of best practices, greater returns on our investments and enhanced client service." 

In its 2017 results out today, UBS said adjusted profit before tax rose 19% year-over-year to CHF 6,335m, while profit before tax increased 32% to CHF 5,409m.

Global wealth management adjusted profit before tax rose 14% year-over-year to CHF 4,128m, with growth in all revenue lines. This reflected higher invested asset levels, increased client transaction activity, higher short term US dollar interest rates, and further progress on mandate penetration and loan growth, the group said.

In terms of financial targets for 2018-2020, UBS is targeting 10%-15% adjusted PBT growth per annum over the cycle for its newly created global wealth management business, and around 10% for asset management.