UBS has been the not so secret beneficiary of the sale of the U.S. private banking business of Credit Suisse to Wells Fargo in October, hiring dozens of its rival's advisers. Credit Suisse has now complained to the regulator in the U.S.
When Credit Suisse (CS) in October sold its U.S. brokerage to Wells Fargo, the transfer of its 270 client advisers was part of the deal. It since emerged that more than a third of the former CS bankers have opted to join rival banks instead – with UBS the biggest taker.
Since October, the UBS Americas division has attracted billions of dollars in assets formerly managed by Credit Suisse. From the 270 advisers, more than 70 moved to the big rival as U.S. portal «onwallstreet» reported. UBS manages about $1 trillion in the U.S.
Increase in Assets – Rising Costs
The reason for the drain is simple: bonus payments at Wells Fargo tend to be smaller than at other banks. UBS has offered the CS advisers a generous signing on bonus.
Wells Fargo on the other set a bonus limit of $5 million, tying it to the rather unusual condition of a 13 year loyalty to the bank.
Was It Worth the Effort?
CS now wants to stop the drain. It filed a complaint against UBS at U.S. regulator Finra called 'Raiding Claim'. According to such an accusation a rival is accused of attacking an institute in a bid to deliberately weaken the claimant. They are justified in cases where rivals hire too many of one specific company and thus endanger its business. UBS and Credit Suisse didn't comment.
The case seems however a little more complicated as CS is about to give up the business. The question arises of how a rival institute can do harm to a bank that voluntarily is withdrawing from an industry, a New York lawyer was cited as saying by «Onwallstreet».
Letter to CS Bankers
CS has also sent a letter to its client advisers to stop them from joining UBS. The bank says: «As you are aware, a large number of employees of the Credit Suisse Private Bank have recently resigned to join UBS Financial Services Inc. in what appears to be a coordinated move,» states a letter from Credit Suisse to ex-employees, and which was seen by «Onwallstreet».
The letter further states that Credit Suisse reserves its rights with respect to advisers' departures, including the right to assert that the Protocol for Broker Recruiting does not apply to their recent resignations.
