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Top of the pile US wealth managers catching up with UBS

Regulations and fines could affect the competitiveness of the big Swiss banks


UBS has retained its top ranking of global wealth managers in the annual Scorpio Partnership Private Banking Benchmark report. The Swiss bank accumulated more than $2 trillion (CHF1.9 trillion) in client assets for the first time, according to Scorpio calculations. 

Credit Suisse, with $883 billion of assets under management (AuM), held on to fourth place in the league table despite seeing client money reduce by 0.5%. UBS by contrast grew assets by 3.5%, Scorpio said. 

With the American economy recovering strongly last year, United States banks saw the greatest growth. Morgan Stanley ($2.025 trillion AuM) and Bank of America/Merrill Lynch ($1.98 trillion) are breathing hard down the neck of UBS ($2.035 trillion AuM) after swelling their coffers at a more impressive rate than the Swiss bank in 2014. 

UBS enjoys a 9.9% share of the $20.6 trillion private banking market, according to Scorpio. The top ten wealth managers combined control nearly half of the market. 

But while AuM rose 3.4% on average among the 200 industry players surveyed, and operating profits increased by an average of 3.3%, costs are still rising faster than income, according to Scorpio. 

As a result, cost-to-income ratios (a key indicator of operational efficiency) continue to move in the wrong direction. The average industry ratio rose from 83.5% in 2013 to 84.4% last year (meaning 84.4% of income is eaten up by expenses). 

Good and bad news

 “This is a complex moment in the history of our industry,” said Sebastian Dovey, managing partner at Scorpio Partnership. “The good news is that client volumes and demand for wealth services are strengthening for many. But the bad news is the industry is still tackling major compression factors in terms of costs versus income.” 

“Some are not moving quickly enough with rates of growth slowing.” 

In the past few years many Swiss private banks have been hit with the double whammy of meeting the cost of increasingly complex regulatory requirements and tax evasion fines. 

A number of European banks have been adversely affected by the currency performance of the euro. 

Looking ahead, in the intensively competitive market it will be the details that make the margin of difference. The winners will be those that pay the most detailed attention to the optimised commercialisation of the client journey and benchmarking this among peers,” Dovey said.

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