Investment Banking News
UBS targets Asia for Wealth Management Growth
UBS AG (UBSG.VX), the world’s biggest wealth manager, expects Asia Pacific assets to account for as much as 30 percent of the funds it oversees within the next 10 years, the Swiss bank’s chief executive said.
UBS’s wealth management business looked after about $2.04 trillion (1 trillion pounds) in invested assets at end-2014, half of which in the Americas, according to bank filings.
“I wouldn’t be surprised if the Asia business is closer to 30 percent (of the bank’s total managed assets) than the 10 percent it is today,” Chief Executive Sergio Ermotti told Reuters in a recent interview.
Chinese wealth creation will drive much of the bank’s expansion in the region. Net new money from the Asia Pacific region, including Japan, amounted to 26.7 billion Swiss francs (19 billion pounds) over the last four quarters, compared with $10 billion in the Americas, the bank’s latest financial report shows.
“We do expect wealth creation to be a big theme in China,” he said. “The Chinese business is a very big business and a very important business, in terms of profitability and scope and size.”
According to the Boston Consultancy Group, private financial wealth in China, where the number of millionaire households reached 2.38 million in 2013, is expected to grow 84 percent by 2018, from $22 trillion to $40 trillion.
Ermotti, in Beijing for a forum, said it was important for China to further open up its capital markets, and particularly its debt capital markets, to reduce the economy’s reliance on banks for financing.
He also said UBS, which employs about 500 people in China, plans to “substantially increase” that number over the next decade, with the majority of new hires in the wealth management business.
“The story for many years was how to bring foreign investment into China,” said Ermotti. “The next step is how we can help Chinese investors go outside of China.”
UBS operates a domestically licensed bank in China, a wholly owned asset management company, and holds a 49 percent stake in UBS SDIC Fund Management Co.
The bank last purchased a Shanghai-based futures operation, and is expected to open a Shanghai branch, targeting wealthy individuals, before the end of the year.