UBS' Wealth Management Hurdles
One of the main reasons why UBS embarked on the merger was to cut the costs. This seems to have been achieved, at least compared with the fourth quarter of 2017. Costs declined 7 percent to about 3 billion francs.
Time will tell whether this will hold up. The cost for its staff may further fall as a reduction of the headcount at the back office will pay off. The bank will also be able to command better prices and conditions from third-party providers thanks to its size.
4. Crux With Cost-Income Ratio
The cost-income ratio is one of the new measures applied to the private bank. It aggregates and averages the performance of individual regions, which produced a reading of 73 percent in the first quarter. The Americans will rejoice, given their previous performance of more than 83 percent. Others won’t like it quite as much. Switzerland, EMEA and Asia saw their achievements watered down. UBS did say how well the regions fared individually, but the new standard nevertheless is 73 percent.
5. Two Cultures in One Unit
The business approach in the U.S. and in the rest of the world varies widely. The typical U.S. broker earns his money by enticing the client to trade securities. By contrast, the rest of the world tries to focus more on high-quality advice.
The two units are still separated with Tom Naratil and Martin Blessing leading one each. The question is when the merger of cultures will come. Taking this hurdle will probably prove the biggest for the merged private bank – and the two executives. Synergies will be achieved in full when two cultures become one.
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