ZURICH (March 07, 2011): For Swiss bank UBS, the days of easy margins earned from tax-evading clients
are over and the new focus is on the wealthiest customers with the best profit potential. Analysts believe
UBS should pull back from the scramble for assets currently obsessing other wealth managers.
Instead it should cherry-pick clients who will trade frequently, invest in hedge funds and other high-margin
products and need investment banking services.
UBS wealth management margins may have recovered to 92 basis points in the final quarter after falling to
89 in the third quarter. But profitability still lags that at peers Credit Suisse and Julius Baer and experts say
restoring margins to their former levels is unlikely.
Since the financial crisis, clients are more aware of the commissions they are paying and less willing to
accept high charges for complex products that may not protect their capital.
Moreover, a world-wide crackdown on tax evasion has decimated the offshore client base, once the most
profitable clients for private banks. "UBS understands there is a structural decline in margins," said Florian
Esterer, head of global equities at Swisscanto, which manages 57.4 billion Swiss francs and holds a $140
million stake in UBS.
