UBS angles more wealthy American clients

The world's largest wealth manager keeps on growing. UBS

Switzerland's largest bank, UBS, says it will spend $500 million (SFr650.4 million) to acquire the private client network of Piper Jaffray Companies.

The deal to buy the brokerage unit for wealthy investors will strengthen UBS’s position in the United States.

It also includes taking on $300 million in client loans from the Minnesota-based company. The purchase will increase UBS assets by $52 billion and add almost 90 branch offices located across 17 US states.

Piper Jaffray, which has more than 800 financial advisers and serves about 190,000 households, provides wealth management services to private clients include estate planning, retirement planning, brokerage and insurance.

“The acquisition of this financial adviser network will help UBS to rapidly grow its own US network and help us serve additional clients in the US, mainly now in the Midwest and in the western US,” UBS spokesman Christoph Meier told swissinfo.

“This acquisition is complementary to our existing geographic coverage in the US,” he said.

Lucrative business

The deal is the latest in a string of small- and medium-sized acquisitions in recent years that have swelled its base of managed assets in the lucrative business of looking after the rich.

The Zurich group is already a major player in the North American wealth management market after building it up from the major acquisition of PaineWebber in 2000.

“Wealth management is a core business for UBS and wherever we do this business we want to grow it, so [Tuesday’s acquisition] fits well.”

“We currently have a network of 7,500 financial advisers and we manage around SFr752 billion for wealthy clients in the US, so this business model fits well into our existing business,” Meier said.

He added that UBS might also consider further acquisitions if the conditions were right.

Analysts at Bank Julius Bär welcomed the transaction, saying UBS was paying only 1.7 per cent of assets under management for the transaction. “[It is] an acquisition which we would value as not really expensive”, they said in a note.

The deal is expected to close at the beginning of the third quarter, subject to regulatory approval.

swissinfo, Robert Brookes

Key facts

Financial figures 2005

Net profit: SFr9.844 billion (+28%)
Total attributable profit: SFr14.029 billion (+75%)
Total net new money: SFr148 billion (+80%)
Proposed dividend payout: SFr3.80
Staff at the end of 2005: 69,569 (26,028 in Switzerland)

In brief

With its latest acquisition, UBS plans to spend up to $875 million to buy the private client network of United States wealth manager Piper Jaffray.

UBS has been building up the lucrative US market since it made the major acquisition in 2000 of PaineWebber, a name it dropped with its one-brand strategy.

The group, which has shunned major acquisitions in recent years, aims to buy a minority stake in troubled brokerage Beijing Securities to give it more access to China’s growing investor market.