UBS to revamp business unit for super rich
Less than three months after joining UBS, Iqbal Khan is starting to put his stamp on the world’s biggest wealth manager.
Khan and Tom Naratil, the two co-heads of wealth management at the Swiss lender, plan to break up the ultrahigh-net-worth business led by Joseph Stadler and set up a new unit specifically for rich clients who require investment banking services, people with knowledge of the matter said.
The firm also plans to give wealth managers more autonomy in granting loans, in a bid to accelerate approvals and increase the business it does with clients, the people said, asking not to be identified as the matter is private.
UBS is looking for ways to maintain its edge and reinvigorate its shares, which have trailed rivals over the past year. Khan — who joined after an acrimonious split with Credit Suisse in October — was tasked by UBS CEO Sergio Ermotti with devising a plan within 60 days of his appointment to boost profit.
UBS declined to comment on the changes.
The revamp of global wealth management is expected to be part of the bank’s strategy update in January. Khan and co-head Tom Naratil plan to move clients from the ultra high net worth unit into existing regional divisions if they don’t need investment banking services, people with knowledge of the matter said.
The remaining ultra-rich clients — those who need to work with the investment bank — will be moved to a new business under Stadler’s leadership that will also incorporate the Global Family Office, a joint venture with the securities unit, the people said. The move will double the number of clients who are served by the global family office, the people said.
The reorganization will also remove some management layers, helping UBS move faster when executing on transactions. Some client advisers from the old ultrahigh-net-worth unit will be shifted to the existing regional groups for the Americas, EMEA, Asia Pacific or Switzerland, the people said.
To help boost loans to rich clients, UBS also plans to book profits and risks from lending in the wealth management business, while giving the investment bank a fixed fee for managing the risk, they said. Khan previously indicated that UBS could make “quick wins” by increasing lending, a strategy he used at his former employer.
The goal is to eliminate time-consuming negotiations between wealth managers and the investment bank, and speed up approval of loans. UBS is currently losing out on large transactions because of the cumbersome processes it has compared with competitors, the people said.
A key objective of the new set up is to enable the bank to do more business with each client as the speed of wealth creation is expected to slow, the people said. Currently, more than 1,000 advisors exclusively work on the $1.3 trillion in invested assets from the richest of the rich, according to UBS’s latest quarterly report.
The existing setup of the wealth management business, with a separate unit for the ultra-rich and distinct family office, dates back to 2010, when Juerg Zeltner was at the helm. The rationale at the time was to give clients better access to the investment bank and asset management divisions and offer them a broad range of services normally reserved for institutional clients.
The move saw former JPMorgan Chase banker Stadler steadily gain in power. He’s run the division since its set-up, pulled in ultra-rich clients from Europe, Asia and Switzerland and gained additional responsibility in 2018 when UBS merged its two wealth management arms. He will continue to report to Naratil and Khan after the reorganization.
The bank is considering other changes within wealth management. Starting early next year, international clients booked in Switzerland who have between $500,000 and $5 million in assets will fall under a new coverage model that uses more technology and fewer human interactions, Christine Novakovic, the head of wealth management in Europe, the Middle East and Africa, told employees in a memo last month.