Citigroup Says UBS Has Long Wait Before Net Client Inflows Resume - Report

Tom Burroughes Editor London 10 September 2009


UBS' wealth management arm may not be able to attract net new investments until 2011, following the unforced departure of over 1,400 advisors, Citigroup banking analysts said, according to the Wall Street Journal.

"Assets under management attrition relating to the unforced advisor departures is expected to carry over into the first half of 2010," analysts including Andrew Coombs wrote in a note to clients after meeting Juerg Zeltner, chief executive of UBS Wealth Management Global, the publication said.

"Combined with the envisaged offshore outflows, a return to positive net new money might therefore not occur until 2011, although this is clearly dependent on market direction and activity and future wealth creation/consumption," Citigroup said.

Beset by heavy losses from the credit crunch and its wrangles with US tax authorities in recent months, UBS executives will be hoping that the Zurich-listed firm can recover. It has recently lost its position as the world’s biggest wealth manager to Bank of America Merrill Lynch, although UBS is arguably still the world’s biggest international wealth manager.

For five straight quarters, clients have withdrawn money from UBS's wealth-management business. Many of those losses have been driven by the flight of the Swiss bank's international investment advisers, Citigroup noted.

In the 18 months leading up to June 2009, 2,147 advisors left the firm, 1,440 of which were unforced departures, the US bank said. Another 678 departures are seen in the second half of 2009 before an expected rise in headcount beginning in 2010.

Some 60 per cent of outflows in the last 18 months came from clients who still have a UBS account, Citigroup noted. That suggests UBS management's "win-back" initiatives could gain traction, the analysts argued.

There are at least a few signs of a turn. Inflows have already turned positive in Asia, Citigroup noted, and "the outlook for domestic Swiss and onshore Europe appears bright."

But outflows in Swiss offshore "could yet continue for some time, especially given potential upcoming tax amnesties."

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes