UBS ploughs on with North American expansion

UBS headquarters in Zurich Keystone Archive

UBS is to buy the pension management arm of Royal Bank of Canada for C$350 million (SFr406 million) as part of its expansion in North America.

This content was published on June 21, 2001 - 10:14

The purchase of RT Capital, which works out at $230 million, is small compared with UBS's $11.8 billion acquisition of United States broker PaineWebber last year.

However, it underscores UBS's plans to expand in the rapidly growing wealth management business.

UBS said the acquisition would be incorporated into its asset management activities, which include Brinson, a Chicago-based institutional fund manager which UBS bought in 1995. The new division will be renamed Brinson Canada.

Following the acquisition of PaineWebber, some analysts have voiced their concerns that UBS, under its new British chief executive, Luqman Arnold, is moving towards being more of a North American business than a Swiss business.

UBS spokeswoman Monika Dunant told swissinfo that this wasn't the case.

"We are Switzerland's leading bank and intend to stay the leader," Dunant explained. "Our relation with the Swiss people, the Swiss authorities and the Swiss body politic are key to us."

Zurich Cantonal Bank analyst, Christoph Ritschard, told swissinfo that North America was certainly an important market for UBS, but said didn't expect any more acquisitions of this kind.

"I think North America is a very important market with 28,000 people working over there, that's about one third or even more of the whole head count of UBS," said Ritschard.

"With this acquisition UBS is now much more recognised as a competitor in investment banking products in the US and Canada but I don't expect any additional moves of this size in the future."

At the end of the first quarter of 2001, UBS was managing around SFr2.44 trillion ($1.362 trillion) in institutional and private client wealth, with the asset management division alone looking after SFr637 billion.

RT Capital's C$31 billion in assets under management seems small in comparison. But as Canada's biggest privately owned pension fund manager, it boasts about 700 institutional clients.

RT Capital, which was put up for sale in March, attracted a handful of bidders, according to the Canadian media.

The newly acquired division will keep RT Capital's current chairman and chief executive Michael Wilson at the helm. Wilson, who was Canada's finance minister from 1984 to 1991, said he was under contract for another three years.

Christoph Ritschard, said the price of the deal was moderate in terms of the going rate for institutional asset managers.

"It is not so expensive. They are paying about 1.2 per cent of the managed assets, and that is absolutely in line," Ritschard said.

He added that the deal, although small, did help to round out UBS's strategy in terms of asset management.

UBS said it has no plans to lay off any of RT Capital's 103 employees.

"This is a growth strategy," said Benjamin Lenhardt, head of UBS Asset Management in the Americas.

The deal is expected to be closed by the end of September, pending regulatory approval.

swissinfo with agencies

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