Meanwhile, Credit Suisse CEO Tidjane Thiam won't be able to rest on the laurels of his successful three-year revamp of Switzerland's second-largest bank very long. To be sure, Credit Suisse is finding more favor with investors, but Thiam is still beset with a bulky legacy trading division.
Winning Funds vs Earning Money
He's also just lost Iqbal Khan, arguably his most important banker for guaranteeing wealth management profits. Investors will look to the unit in coming months for proof that it can still net fresh money and notch up revenue under Philipp Wehle, Khan's former finance chief who was hastily promoted three weeks ago.
An ultra-rich focus embraced by both banks won't be won on net new money along. Winning new clients is only half the battle; the art is to show that UBS and Credit Suisse can generate sustainable revenue from the sophisticated client segment.
Crowded Field
Against this backdrop, recent comments from UBS banker Joe Stadler, that the wealthiest tier of clients are increasingly looking to their own networks of family offices and hedge funds for investments and transactions, are alarming. UBS' response – to set up an investment banking unit specialized in private market transactions, as finews.asia reported, looks late.
Credit Suisse is in the same boat – and it's getting crowded. Deutsche Bank launched a unit focused on ultra-rich clientele and family offices in April. J.P. Morgan and Goldman Sachs are putting much more muscle into winning the super-rich, as Swiss efforts illustrate. Not to mention the flotilla of nimble, specialized players like multi-family offices.
UBS Investors Want More
It's not rocket science: margins for banking the ultra-rich are going to erode. Thus far, UBS and Credit Suisse have relied on excellent positioning with the world's super-wealthy.
But UBS' stock price shows that investors are running out of patience. They want more – and UBS will eventually be forced to respond decisively.
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