UBS reels as B of A takes top spot in wealth management
UBS AG (UBS), the once-proud symbol of the Swiss banking system, is reeling.
The Zurich-based company, which has been on the hot seat with the IRS for allegedly helping wealthy Americans evade taxes and had to pay a $780 million penalty, is now watching its wealth management business erode. According to the Financial Times, Bank of America Corp. (BAC) has now overtaken UBS in the business of helping the rich stay rich, thanks to the Charlotte, North Carolina-based bank's disastrous acquisition of Merrill Lynch.
"2009-2010 will be a moment of truth for the global private banking model," Sebastian Dovey, managing partner of Scorpio Partnership, the consulting firm who released the data, told Reuters.
UBS shares, down more than 78 percent over the last three years, was trading down this morning, as was B of A.
Last month, there were media reports that UBS Chief Executive Oswald Gruebel wanted to shake-up its U.S. brokerage business after deciding against a sale of the unit, which consists mostly of the Paine Weber brokerage business it acquired in 2000 for $10.8 billion. Earlier this year, UBS announced a campaign to lure over brokers from its rivals.
"People close to the situation said UBS had contacted senior figures in the financial industry to sound them out over taking a top role in its U.S. brokerage business. It is not clear whether they were being asked to replace Marten Hoekstra, the head of UBS's wealth management operations in the Americas, or to work alongside him," according to the FT.
Wealth management continues to be one of the few bright spots in the financial services industry. According to Reuters, there was a 6 percent rise in new hires in wealth management. In this economy, that's saying something.