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UBS is 'constantly approached' about asset-management unit

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UBS is “constantly approached” about its asset-management business as deal-making accelerates in the industry, Chief Financial Officer Kirt Gardner said.

“We’re starting to see some consolidation,” the CFO of the world’s largest wealth manager said at a conference in London on Thursday, adding that the bank remains committed to the unit.
“Many banks that are owners of asset managers see it as way to address capital challenges.”

Asset managers are increasingly considering tie-ups as they come under pressure from cheaper index-tracking funds, which are performing strongly as quantitative easing boosts global stock markets. BNP Paribas is among the firms exploring a deal with Axa’s European asset-management unit, people with knowledge of the matter have said, while Standard Life has combined with Aberdeen Asset Management to form the U.K’s largest active money manager.

While UBS is “constantly approached with conversations” about consolidation, it considers itself the “natural owner” of the unit, Gardner said, adding that he sees the business generating significant value over the coming years.

UBS’s asset-management business has yet to generate 1 billion Swiss francs ($1 billion) in annual pretax profit, a target set for the unit in May 2014. It contributed 7.2% to pretax profit, or 452 million francs, last year—dwarfed by the larger wealth-management and investment-banking operations.

Still, the Swiss bank reported strong inflows in the first half into funds run by UBS asset management. Net new money turned positive in the second quarter and has stayed positive in the last three months, he said, giving the business a tailwind into 2018. More than a third of total invested assets are in passive strategies, the bank has said.

One area with potential for expansion is mainland China, where the unit secured a private-funds license in July, allowing UBS to start managing money for mainland institutional and affluent investors.

On President Donald Trump’s new tax plan, Gardner said it would, in general, be a “net positive” for the U.S. economy. He added that he’s “very optimistic” about his company’s U.S. wealth-management business, an important contributor to profit along with international wealth management and Swiss retail and corporate banking.

Bloomberg News