Analyst estimates for 2011
show Credit Suisse may become larger than rival UBS in one of the
key areas of their private banking assets under management. Strong
growth in Asia and a record start to 2010 at Credit Suisse, coupled
with more outflows at UBS, indicate the crossover will happen in
this year’s final quarter.
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Credit Suisse could eclipse UBS as
Switzerland’s largest wealth manager in assets under management by
the end of this year if it maintains its current rate of
growth.
In a research note, Morgan Stanley analyst Huw
van Steenis said a record start to the year for Credit Suisse’s
private banking business, excluding retail brokerage activities,
would see it surpass struggling UBS going into 2011.
Credit Suisse announced it had a record start
to 2010, which van Steenis reads as better than CHF16 billion ($15
billion), or 8 percent net new money for the first quarter. Van
Steenis expects 2010 outflows at UBS of around CHF37 billion
Asia-Pacific assets under management at Credit
Suisse were particularly strong. They increased 45.6 percent to
CHF67 billion – the highlight of a bullish set of results for the
bank in 2009.
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By GlobalDataAsia has been the growth engine of Credit
Suisse’s private bank in 2009, though Marcel Kreis, head of
Asia-Pacific private banking, has been cautious about an aggressive
shift in focus towards the region, whether in assets under
management or relationship managers.
In an interview with PBI he said there may be
a “rebalancing of relationship managers in favour of Asia when
conditions start to improve”, but that the current balance (around
12 percent of the bank’s RMs are in Asia) was unlikely to change
significantly.
HSBC has been the most aggressive in its
strategy towards Asia, with CEO Chris Meares claiming in another
interview with PBI that the bank would have around half of its
assets under management in Asia by 2014, up from an estimated
current level of around 30 percent.
There have been reports Meares is in talks to
relocate to Hong Kong given the speed of growth in the region,
though he denied such a move was likely at the PBI wealth
conference in November. The head of JPMorgan’s international
private banking business, Douglas Wurth, recently relocated from
New York to Hong Kong.
Net new assets from wealth management clients
at Credit Suisse (which excludes institutional flows) totalled
CHF108.6 billion, up 5.3 percent for the year, compared to 5.8
percent in 2008. The bank posted income before tax of CHF3.651
billion for 2009 in its private banking division, down five percent
on last year. Income across the group was CHF6.411 billion.
“In a market that is undergoing significant
structural changes, our private banking business has outperformed,”
said Brady Dougan, the bank’s CEO.
Credit Suisse’s fourth-quarter private banking
profit was down 1 percent on the third quarter and up 66 percent on
the same period last year, at CHF857 million.
UBS shed CHF33.2 billion in client assets in
the fourth quarter, taking its outflows for the year of CHF101.3
billion, 6.3 percent of 2008 year-end assets.
The 2009 net new money figures are only
slightly better than those of 2008, when CHF123 billion (5.4
percent) was moved out of the bank by clients. In percentage terms
the 2009 figures are worse, because wealth management assets under
management (AuM) at the start of 2008 were higher, at CHF2.3
billion. The bank incurred CHF8.5 billion of client outflows as
Italian clients repatriated their assets following a tax amnesty in
the country, due to end in April.
UBS CEO Oswald Grübel described the fourth-quarter
outflows as “disappointing”. He said the bank was now profitable
across all divisions for the first time since the start of the
financial crisis. Wealth management made a fourth quarter net
profit of CHF1.109 billion, up 40 percent on last year. Overall net
profit at the bank was CHF1.205 billion.
An additional challenge is the rate at which
UBS continues to shed client advisers – the bank reported a 25
percent fall last year. This leakage may begin to reverse with the
bank's return to profitability but assurances so far have
been few and far between.
Many see the man responsible for transforming
the fortunes of Credit Suisse as the best man for the job, and
Grübel's performance since taking control of the bank
early last year has been complemented. The announcement that UBS
won’t be awarding senior staff CHF300m in cash bonuses after
failing to meet internal profit targets should also serve to
restore client confidence to some degree, even if its impact on
staff satisfaction is less certain.
Chris Skinner, banking analyst and chairman of
the Financial Services Club, said: “Ossie Grübel is doing a good
job. He has been there a year and people think he is turning it
around. He seems to be putting in quite a strong management grip on
the company and seems to be moving it forward.”
