UBS has just published its financial results for the first quarter. Globally, as we’ve already reported, they show that the bank cut bonuses across its divisions.
But what do the earnings figures tell us about jobs and careers at UBS in Hong Kong and Singapore? If you work for the Swiss firm in Asia (or if you want to get a job there), here’s what you need to know.
It was a bleak beginning, but March was better
If you have a UBS job in Singapore or Hong Kong, January and February probably weren’t the best of months for you. Transaction revenue in Asia was down by a third in Q1, a fall which chief financial officer Kirt Gardner blamed on negative “client sentiment” and “challenging conditions” in the region, including concerns about Chinese economic growth and the US-China trade dispute. But, said Gardner, Asian clients were “more positive” in March and this bodes well for the second quarter.
Investment bankers underperformed
Within UBS’s Investment Banking unit in Asia, operating income was down 29% to $500m year on year in Q1. UBS doesn’t explain why, although M&A bankers may be partly to blame. In Dealogic’s APAC (ex-Japan) M&A revenue league table for the first quarter, UBS fell from first place in 2018 to seventh place in 2019. Separately, in March, the Securities and Futures Commission (SFC) banned UBS from sponsoring initial public offerings in Hong Kong for one year, following failings it made during three listings. This could lead to rival banks poaching its ECM specialists, we reported the time.
UBS Hong Kong is good at trading with China
If your Hong Kong clients like trading in China, UBS is now the place to work. UBS claims to be the number one bank in northbound Stock Connect execution (i.e. Hong Kong into Shanghai and Shenzhen). Moreover, Stock Connect has been classed as a so-called “alpha initiative” for UBS, so expect further investment in this field.
UBS didn’t hire Asian private bankers in Q1
Last year UBS added 101 relationship managers (or ‘client advisors’ as it calls them) in Asia – more than any other private bank in the region – taking its headcount to 1,138. This hiring ground to a halt in Q1 as its RM workforce fell by two. Why the slight decline when Q1 is typically when private banks are busy hiring people after they’ve been paid bonuses? UBS doesn’t say, but it is likely that the bank wants its 2018 recruits to bed in and start increasing their revenue numbers before it recruits again in bulk. And as we reported in January, UBS is a prime headhunting ground for other private banks expanding in Asia – even its underperformers are highly sought after.
And UBS cut the bonuses of its current private bankers
Variable compensation (i.e. bonus) costs within UBS’s Global Wealth Management (GWM) unit fell 7% year on year in Q1. While UBS’s report doesn’t break out comp costs geographically, it’s likely that Asia-based private bankers would have taken their share of the cut-backs. Asian operating income in GWM slumped 18% to $582m for the first quarter.
But private bankers are now taking in more money
It wasn’t all bad news for UBS’s private bankers in Singapore and Hong Kong. Asian invested assets in GWM reached $405bn at the end of Q1, the first time the figure has breached the $400bn mark. Net new money – a key measure of performance in private banking – was also “notably strong” in Asia ($16.3bn), according to UBS’s results.
Avoid working in asset management?
UBS also revealed its invested assets by region for its Asset Management division, which is currently in merger talks with Deutsche Bank. Here the picture for Asia wasn’t so pretty – assets fell 11% year on year to $149bn. Earlier this week, however, UBS Asset Management retained its position as the top-performing foreign fund house in China, according to consultancy Z-Ben Advisors.
It’s a good time to move to…China
Perhaps surprisingly, UBS’s Q1 results did not dwell on its progress in China. In December, UBS became the first foreign bank to take advantage of new Chinese regulations and secure a majority 51% stake in a mainland securities joint venture. Having control over the JV, UBS Securities China, now gives UBS a “great foothold for future expansion”, according to its 2018 annual report, which was released last month. More specifically, UBS wants to grow in China by “further strengthening” Corporate Client Solutions, the unit within its investment bank which advises clients on business opportunities and helps them raise capital. UBS is targeting both “onshore and offshore” growth for its solutions team, suggesting jobs will also open up for Hong Kong-based investment bankers who cover China.
Image credit: balipadma, Getty
Have a confidential story, tip, or comment you’d like to share? Email: firstname.lastname@example.org or Telegram: @simonmortlock
We are on Telegram! Join us now