Among the UBS business units, Asset Management had the most difficult start into 2016. The departure of one important client had eyebrows raised.
At the presentation of the quarterly figures of Switzerland's biggest bank, the reluctance of customers to invest their money amid turbulence on the stock markets was the main topic discussed. The asset-management business was hurt in particular.
The unit managed by Ulrich Koerner reported a decline of pretax profit to 110 million Swiss francs from 153 million in the previous quarter. UBS was hurt by a decline in revenues linked to the investment performance – with equity products and the hedge fund O'Connor hit the most.
Liquidity Needs of Customers
Dawn Fitzpatrick, who assumed power at O'Connor in November 2015 and was hailed as a rising star of the past year by finews.ch, has suffered a setback.
Worse still than the temporary drop in profit was the outflow of money – once a customer has left his bank, he won't be back quickly. Excluding money-market flows, the net new money outflow amounted to 5.9 billion francs.
Included in this figure was the «pricing-related» outflow of 7.2 billion francs of a single client. A further 3.8 billion followed due to liquidity needs of customers. These outflows affected lower-margin passive products, UBS said.
Still, the outflow must have hurt a unit that only just rearranged its distribution network and propped up the product portfolio as it tries to ramp up business. The unit has become more efficient – but also lost 14 billion in assets under management compared with a year earlier.
