UBS has been able to attract a sizable part of the U.S. private banking business of Credit Suisse after the unit was sold to Wells Fargo in October.
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 a string of former CS bankers have opted to join rival banks instead – including UBS. The reason is simple: bonus payments at Wells Fargo tend to be smaller than at other banks.
Since October, the UBS Americas division has attracted billions of dollars in assets.
Increase in Assets – Rising Costs
Earlier this week, UBS struck again. Switzerland's biggest banking institute hired several teams with an aggregate $2.5 billion under management, U.S. portal «onwallstreet» reported.
A further $5.8 billion found their way to UBS with the transfer of 16 CS advisers, the «Wall Street Journal» said a month ago. In all, UBS took more than $8 billion in assets under management since the announcement of the sale in October. Rivals including Merrill Lynch and Morgan Stanley also attracted billions of dollars.
Was It Worth the Effort?
The net new money will give UBS' earnings a boost. Wealth Management in the Americas, under the guidance of Tom Naratil, reported an increase of earnings in the third quarter compared with a year earlier.
The new bankers will however also incur higher personnel costs, negatively affecting the cost-earnings-ratio of UBS. The ratio declined slightly to about 86 percent in the third quarter, but remains higher than at other regional wealth management unit within the bank.
Coming quarters will show whether it was worth for UBS to attract so many CS bankers.
