UBS to Shut Thousands of Smaller Credit Suisse Asia Accounts
(Bloomberg) — UBS Group AG is planning to shut smaller-value Credit Suisse accounts numbering in the low thousands at its Asia Pacific wealth management arm to exit relationships with poor returns, according to people familiar with the matter.
The lender is reviewing the accounts with a balance of around $2 million or less, said the people, who asked not to be identified discussing private information. Many of the accounts are in the Asian business hubs of Singapore and Hong Kong, the people said.
The move underscores a broader effort by Sergio Ermotti’s UBS to carve out parts of Credit Suisse that it doesn’t want after acquiring its rival in a 3 billion Swiss franc ($3.4 billion) state-brokered takeover announced a year ago.
The world’s largest wealth managers have in recent years put Asia in the center of their growth plans, but a downturn in China’s economy has meant many clients are transacting less. UBS oversees about $3.9 trillion in assets at its wealth division, 17% of which is in Asia-Pacific.
A spokesperson for UBS declined to comment.
While the bank still wants to keep clients above that threshold, the lower value accounts don’t generate high enough returns, the people said. Clients with larger balances tend to make larger transactions, generating higher fees.
Just over four years ago, Credit Suisse carved out an entity in Europe in a bid to better serve the millionaires who required investment advice but not the bespoke services demanded by its top billionaire clients.
Read More: Richest of the Rich Are No Longer Holy Grail for Credit Suisse
Since closing the takeover of Credit Suisse in June, UBS has outlined major targets for the integration of its former rival including around $13 billion in cost savings. Both Ermotti, who returned to lead UBS last year, and Chairman Colm Kelleher have warned that 2024 will be a more difficult year in terms of keeping costs down.
Prior to the UBS takeover, Credit Suisse had pursued a decade-long push into Southeast Asia, where it lent to billionaire business families. That helped make Credit Suisse the go-to foreign bank for entrepreneurs, a status that could help boost UBS’s ambitions.
In the months leading up to its rescue, Credit Suisse bankers rushed to attract new money at deposit rates significantly higher than rivals. The bank had also dialed back some stringent anti-money laundering controls in Asia after they drew protests from clients and bankers and contributed to staff departures, Bloomberg News reported in Feb. 2023.
–With assistance from Myriam Balezou.
(Adds details on how Credit Suisse sought to attract clients in final paragraph.)
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