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June 21, 2016 at 10:27 AM
With the news that UBS (UBS) is trimming its recruiting efforts in the Americas and restructuring its field structure and compensation plans, an Aite Group analyst has said the unit could be put up for sale. But UBS insists this speculation is unfounded.
“UBS [Wealth Management Americas] is not for sale,” the company said in a statement on Tuesday. “Our wealth management franchise is at the core of our strategy, and we are uniquely positioned in the U.S. to succeed. Our WMA business makes up over half of the invested assets in the world’s largest and only truly global wealth manager. WMA continues to have the most productive advisor force in the industry in the largest market in the world.”
This weekend, the New York Post printed a story based on remarks made by Aite’s research director Alois Pirker, who previously worked for the Swiss bank.
“The story was a little overblown… you know the New York Post,” said Pirker during an interview Tuesday with ThinkAdvisor. “It came out of a casual conversation over a beer … but there’s always a chance they might sell it.”
As the analyst points out, “Very rarely will firms put [it] officially out there” that they are selling a business. “So, I would say the conversation does make sense: Should they own it or not?”
The gossip comes about two weeks after UBS said that it plans to raise pay for its top advisors, support retention and reduce advisor recruiting by 40%.
“Do you really want to own a retail brokerage in the U.S. or not? That’s the big question,” the analyst explained. “So far, they have stuck with the strategy, and over the past 15 years or so have showed a lot of staying power – including going through two [financial] crises.”
Five years ago, Pirker says, “I would have said the chance they would sell it was pretty high … I am surprised they still own it.”
Plenty of Pressures
Today, there is “no indication they will sell it,” he adds. However, there are certain trends affecting the industry – namely regulation – “that could make the possibility [of a sale] change.”
“Many international franchises have been selling [their U.S. wealth businesses],” Pirker said. “Deutsche Bank, Barclays and Credit Suisse have been pulling back from the U.S. for the past 12-18 months.”
It also comes as European banks struggle with negative interest rates, which have helped pummel their share prices. Year to date, UBS is down about 20%, while Deutsche Bank has fallen 31% and Credit Suisse by 40%. Plus, they face stringent capital requirements, other regulatory pressures and related strategic decisions, Pirker says.
“Rumors about UBS wanting to sell their U.S. wealth management unit have been out there for years, but what’s probably revived them now is the fact that the firm is scaling back its advisor recruiting efforts,” said New York-based executive search consultant Mark Elzweig in an interview. Adding to the chatter, he says, is the fact that Pirker “is one of the wealth management industry’s most respected commentators.”
