Asian bonus expectations rise at UBS after 97 private bankers depart

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Asian bonus expectations rise at UBS after 97 private bankers depart

UBS’s headcount of Asia-based private bankers fell by 97 year-on-year in the fourth quarter, but its remaining bankers have become much more productive, raising hopes for their 2019 bonuses.

The Swiss bank employed 1,041 client advisors (its name for private bankers/relationship managers) in Asia at the end of December last year, compared with 1,138 a year previously, according to its fourth quarter results, which were announced today. UBS still has the largest front-office workforce in Asian private banking by a big margin, but this 9% fall runs counter to a long-standing trend of aggressive hiring by banks in the wealth sector.

UBS declined to comment on the headcount decline, but we understand it was driven by layoffs of underperformers and by natural attrition as banks such as Julius Baer and HSBC stepped up their hiring. “I always see UBS private bankers in the job market,” says former Merrill Lynch private banker Rahul Sen, now a global leader in private wealth management at search firm Boyden. “Bankers who want more geographic flexibility in their market coverage aren’t suited there,” he adds.

Whatever the reasons for private bankers leaving UBS in Asia, those that stayed on enjoyed a strong year. Asian private bankers at UBS have become much more productive as regional assets under management (AUM) reached $450bn at the end of the third quarter. In Q4 2018, bankers were each managing about $313m on average (i.e. AUM divided by headcount). They now have around $432m under their control (per head), a year-on-year rise of 38%.

In other words, although UBS has fewer private bankers than last year, its current crop are bringing in more money. This potentially bodes well for 2019 bonuses. Net new money inflows were “particularly strong” in Asia, CFO Kirt Gardner said at UBS’s results presentation. Asia brought in $3.1bn in Q4, more than any other region.

If UBS rooted out underperforming client advisors in 2019, this year it is focused on reducing management layers in its Asian private bank, under new plans devised by co-heads Tom Naratil and new-comer Iqbal Khan. UBS wants to ensure that its private bankers can make more decisions themselves instead of going through tedious approval processes higher up the food chain. Headhunters do not expect its client advisor workforce to fall significantly in 2020.

Meanwhile, UBS’s investment bank delivered a 33% year-on-year rise in Asia Pacific revenues to $400m for the final quarter. Full-year Asian revenues and profits in IB were flat at $2.1bn and $500m, respectively, but this was a better performance than in Europe and the Americas, which registered falls.

Last month, UBS announced plans to assume 100% control of its UBS Securities China JV, expanding the 51% stake that it was granted in November 2018. At the same time David Chin, head of APAC investment banking, said he wants to double his firm’s current 400-strong headcount in China over the next three to four years. Chin told us in August that UBS’s Chinese recruitment will include bankers in growth sectors such as technology, media, and telecommunications (TMT), financial institutions, and industrials. It will involve UBS’s offices in Shanghai and Shenzhen as well as its mainland headquarters in Beijing.

Photo by olha-zaika, Unsplash

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