UBS Wealth Management
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
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.
UBS Wealth Management