UBS Holds 25 Percent of APAC Private Client Wallet Share
Of UBS Global Wealth Management’s Asia Pacific clients, it claims to oversee an average of around one quarter of their total investable assets and the bank believes it has still ways to go to reach its real ceiling.
The bank believes it should be managing at least one-third of its client’s wallet share, claiming to currently oversee around one quarter.
«When I first came in [to UBS], most clients had seven or eight accounts,» explained Edmund Koh, APAC president of UBS in a «Business Times» report (behind paywall). «If you're lucky, you got 15, 16 percent [then].»
«Go with your Specialization»
Despite Koh’s ambitions, he believes the market remains big enough for competitors but advises many against trying to spread themselves too thinly. He notes that the high cost of doing business in private banking constrains players and many falter while attempting to suddenly expand across too many facets.
«So I would say: Go with your specialization of high margin to bring up your return on tangible equity, or whatever measures you have, rather than move into an area that is not your area of expertise. It's very expensive in private banking.»
Admittedly, some may be able to obtain assets by subsiding rates but Koh underlines the unsustainable nature of this approach.
«So at the end, you lower your cost of leverage to bring in more clients to gain market share?» he explained. «But they don't understand one thing. Most of the clients who take the leverage from them are investing through us.»
Reviewing Costs, No Cuts for China and Tech
Koh said that the bank was «not in the area of cutting yet» but was actively reviewing sectors such as investment banking where it sees a substantial slowdown. Two areas highlighted where investment will not be pulled back in the region were in China and technology.
«Some of our investments may slow down a little, but we will not pull away from these strategic investments,» Koh said. «We may give it another development over a year or 18 months, but we'll continue with that journey.»
Recession Coming Soon
On its loan book, Koh highlights that UBS’s 10 percent ($42 billion) leverage ratio fares well compared to around 20 percent at «very prominent and good competitors». More importantly, he stresses that leverage risk is rapidly increasing with a recession he believes is just around the corner.
«To me, it should be soon. The next recession will test whether the way we have institutionalized our approach, in terms of safeguarding our customers' interest, actually works. I'm confident it will hold,» he said.
«Customers have at least three to four accounts; they will look at the relative experience across a few banks. I dare say, it will be good for us to be put to the test.»
