Iqbal Khan, the new co-head of global wealth management at UBS, plans to break up the Swiss bank’s dedicated unit for the ultra wealthy. According to the Financial Times, this is part of an overhaul designed to increase higher-margin lending to some of the world’s biggest family offices.
According to sources quoted by the FT Iqbal Khan (photo), who joined UBS in October, and his co-head Tom Naratil plan to wind down UBS›s ultra high net worth unit. The unit will be migrated into the bank’s global family office. This is an existing venture positioned between wealth management and investment banking, that was set up to make capital markets advice and products more readily available to UBS›s top private clients.
The supposed reason for the shift is the belief that dividing clients into brackets based solely on the overall value of their assets, rather than how they deploy them, is no longer relevant. UBS declined to comment.
Iqbal Kahn has been tasked with reviving the fortunes of UBS›s $2.5tn wealth management business. Though still the largest wealth manager in the world, UBS has come under fire for the lacklustre returns from the business. Pre-tax profit at UBS›s wealth management division fell 10 per cent in the first nine months of the year as inflows slowed and clients shifted to more conservative products in light of a more uncertain geopolitical and macroeconomic outlook.
At the same time, the ultra-low interest rates have sharply reduced margins in private banking, prompting a wave of new initiatives and strategy changes in recent years to improve returns from risk-averse wealthy clients.
The decision by UBS to close its unit for the super-rich, which was created in 2010, would bring to an end nearly a decade of positioning it as the centrepiece in its pitch to deepen relationships with these privileged clients. The division has grown significantly in scope and size over the years to become one of the most powerful profit centres within the bank.
Mr Khan sketched the outlines of his vision for changing practices within wealth management last month in a memorandum to staff, and identified more lending to wealthy clients as a priority. Further details of the plans are expected to be announced in the bank’s January strategy update, according to the FT.