Bank of America-Merrill (BofA-Merrill) has retained top position
as the world’s largest private bank, according to PBI’s
2010 global index.
According to analysis of 2009 annual reports,
BofA-Merrill kept its assets under management (AuM) above the $2trn
mark at $2.17trn, despite dropping almost 10%.
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The top wealth management position remains a
poisoned chalice, with banks holding the top spot, up until
recently dominated by UBS, dogged by large client outflows.
There are now signs the big players are
returning to health, with improved first quarter figures for both
Merrill Lynch and UBS.
This suggests a potential shake-up in the
industry in the year ahead, with small and mid-sized private banks,
which have benefited for two years from the outflows of the bigger
players, facing a much tougher battle to grow client assets.
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By GlobalDataUBS holds second
UBS remains in second place in the PBI
Index, holding off a fast-charging Morgan Stanley whose AuM jumped
from $522bn to $1.56trn due to its acquisition of Citi’s Smith
Barney brokerage division in the first quarter of 2009.
The 2009 full year results show UBS was the
only other top 10 private bank to lose AuM, suffering a severe 16%
fall to $1.59trn.
Spooked clients pulled out a net CHF183bn
($181bn) over the 18 months up to the end of September 2009 and the
bank accumulated $50bn of write-offs on toxic debt due to the
credit crunch in the US subprime market. However in 2010 it is
expected the bank should return to positive growth.
Citi Private Bank was this year’s
biggest change, falling to an estimated $325bn after the sale of
its private wealth management to Morgan Stanley. This figure has
been estimated as Citi do not report AuM figures.
BNP Paribas-Fortis, Deutsche Bank and Barclays
Wealth all had strong performances achieving 28%, 29% and 21% gains
in AuM respectively in 2009.
In net new money terms, UBS lost more than 6%
and HSBC was down 2%, with Credit Suisse, BNP Paribas-Fortis,
Deutsche Bank and Barclays Wealth generating part of their
increases from the inflow of new assets.
Credit Suisse, which has comfortably been the
best performing player in the top ten over the past two years,
continued to gather client assets at the fastest rate, registering
net new money flows of 5.5% of 2008 year-end assets.
First quarter shows
promise
First quarter figures offer the biggest source
of promise for both BofA-Merrill and UBS. I
n the first quarter of 2010, BofA’s global
wealth and investment management net income rose to $497m, driven
mainly by higher investment and brokerage activity.
AuM, excluding brokerage assets, increased
almost 8% to $751bn compared to the first quarter of 2009.
Total net client assets, defined as AuM, client
brokerage assets, other assets in custody and client deposits was
$2.18trn at 31 March 2010, an increase of $196bn from 31 March last
year.
Merrill Lynch global wealth management net
revenue declined $202m.
UBS returns to growth
Meanwhile, UBS expects to report a pre-tax
profit of at least CHF2.5billion for the first quarter of 2010, its
highest quarterly profit since the start of the financial crisis
and well above analyst forecasts.
Net outflows could be positive in the second
quarter of 2010 for UBS following a reduction in withdrawals in the
first quarter to around CHF8bn for its wealth management and Swiss
bank groups, representing 0.8% of AuM.
The bank estimated its first quarter net new
money outflows were CHF7bn for wealth management in the Americas
and CHF3bn for global asset management.
UBS shed CHF33.2bn in client assets in the
fourth quarter of 2009, taking its outflows in fiscal 2009 to
CHF101bn, 6.3% of 2008 year-end assets.
The bank made the announcement ahead of its
annual general meeting on 14 April, where it was criticised for
maintaining its position on keeping high pay levels to retain
staff.
Despite the announcement being a clear
pre-emptive strike to pacify investors, it suggests that UBS’ AuM
decline has slowed dramatically.
The official first-quarter 2010 results
released on 4 May will provide more detail of the current state of
the bank’s AuM.
JP Morgan Chase’s private bank unit reported a
first-quarter 2010 revenue increase of 20% from the first quarter
of 2009, to $698m, while its private wealth management arm
increased 10% to $343m over the same period.
The group’s asset management unit had net
income of $392m, a 75% increase from the prior year.
Total AuM increased 9% to $1.2trn over the same
12 month period.
AuM reflected net outflows of $40bn for the
quarter and $27bn for the 12 months ended 31 March 2010.
|
PBI GLOBAL INDEX – |
||||||
|
Leading private banks – ranked |
||||||
|
Rank 2010 |
Rank 2009 |
AuM 2010 |
AuM 2009 |
AuM change |
Net new money (%) |
|
|
1 |
1 |
BofA/Merrill |
2,173 |
2,394 |
-9.2% |
n/a |
|
2 |
2 |
UBS |
1,592 |
1,900 |
-16.2% |
-6.3 |
|
3 |
5 |
Morgan Stanley* |
1,560 |
522 |
198.9% |
n/a |
|
4 |
4 |
Credit Suisse |
775 |
768 |
0.9% |
5.5 |
|
5 |
6 |
HSBC |
367 |
352 |
4.3% |
-2.0 |
|
6 |
3 |
Citi Private Bank (estimate) |
325 |
1,320 |
n/a |
n/a |
|
7 |
7 |
BNP Paribas-Fortis |
273 |
214 |
27.6% |
3.3 |
|
8 |
9 |
Deutsche Bank |
272 |
211 |
28.5% |
4.3 |
|
9 |
8 |
JP Morgan |
270 |
258 |
4.7% |
n/a |
|
10 |
11 |
Barclays Wealth |
245 |
203 |
20.7% |
2.1 |
|
Note: based on end-year 2009 figures, |
||||||
