UBS to Withdraw Offshore Private Banking for US Clients

Christopher Owen

17 January 2008

UBS, the world's biggest wealth manager, is to close its traditional Switzerland-based private banking business for wealthy US clients. The move follows a reassessment of the risks and rewards from an activity that has drawn increasing attention from US regulators concerned about marketing efforts in the US by offshore bankers. The decision, according to the Financial Times, was announced internally in late November but only confirmed publicly yesterday. In 2006, private banking accounted for SFr5.8 billion ($5.3 billion) of the group's total pre-tax profit of SFr14.4 billion. Profitability for the US business was not disclosed. About 60 private bankers in Zurich, Geneva and Lugano are understood to be affected. Some might transfer to UBS Swiss Financial Advisers, a Zurich subsidiary created specially to meet US regulatory requirements, but not enjoying Swiss banking secrecy on securities transactions. The FT said employees declined to comment, for fear of breaching internal guidelines or Swiss bank secrecy law, but former staff described falling morale and conflicts between internal growth targets and compliance rules. "This strategic alignment brings our services closer to the clients, streamlines operations and enhances our ability to ensure compliance with applicable laws and regulations," said UBS. UBS and smaller rivals have been building "onshore" banking networks in key markets, often boosted by local acquisitions, such as UBS's takeover in 2000 of PaineWebber, the US broker, or its purchase last year of Banco Pactual in Brazil.