(Bloomberg) — UBS Group AG is seeing a “double-digit growth opportunity” in China’s wealth management industry even as the world’s second-largest economy slows.
“China is going to grow at two to three times as fast as the rest of the world, which makes it a very attractive growth opportunity,” Juerg Zeltner, UBS’s wealth-management president, said at the opening of a wealth branch in Shanghai on Thursday. “Wealth is growing roughly two times the underlying economy, so China for us is a double-digit growth opportunity in our wealthmanagement efforts.”
Chief Executive Officer Sergio Ermotti in January unveiled a plan to double the firm’s workforce in China to about 1,200 over the next five years as he seeks a slice of a financial services market traditionally dominated by Chinese firms. While data on China’s economy continued to be mixed since Ermotti’s announcement, the government resolved at this month’s annual meeting of the legislature to grow output by an average of least 6.5 percent through 2020.
UBS’s expansion in China comes at a difficult time for its wealth management business, the firm’s largest unit, which posted a 47 percent slump in pretax profit in the fourth quarter. Ermotti said Wednesday the group’s wealth management and investment-banking businesses failed to recover in the first quarter as “challenging” conditions continued this year.
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The wealth management business holds a particular allure in China owing to the surging number of millionaires. The country had 1.26 million high net worth individuals at the end of last year, double from 2010, China Merchants Bank Co. and Bain & Co. said in their 2015 survey of the country’s private wealth industry.
Rich Chinese are increasingly embracing private banking services, with 65 percent engaging financial professionals to manage their assets, up from 30 percent in 2009, the survey showed. Besides UBS, companies from HSBC Holdings Plc to Julius Baer Group Ltd. also have ambitions to manage more of that wealth.
UBS and Goldman Sachs Group Inc. are the only foreign firms holding broad licenses that allow them to offer a full range of onshore private banking, asset management and brokerage trading services in mainland China. Other overseas firms tend to manage Chinese wealth mainly from offices in Hong Kong and Singapore.