Jurg Zeltner, chief executive of UBS wealth management, said the bank is also forecasting higher margins this year for its wealth business globally as rich clients move out of cash and make investments.
But he tread a cautious line on the Middle East, from where inflows from rich clients to the private banking industry have slowed following the Dubai debt crisis, and the recent eruption of political tensions.
“The geo-political challenges in the region do have an impact on clients,” Zeltner said. UBS was not slowing down its investment spending in the region but neither was it accelerating that, he added.
“We want to outgrow the market,” he said about the Asia-Pacific wealth management market. “We want to grow twice as fast as the market.”
UBS, which managed about 165 billion Swiss Francs ($178 billion) worth of client assets in the Asia-Pacific region at the end of September, is the biggest wealth manager in the region.
Asia has become a battleground for global and Asian private banks who are competing for market share in a region that is fast outpacing the US and Europe in economic growth.
The number of millionaires in the region has risen to more than three million, as per a Merrill Lynch-Capgemini wealth report.
The combined wealth of Asia-Pacific high-networth individuals, or those with investable assets of more than $1 million, is estimated to grow at an annual rate of 8.8 percent until 2018, faster than the global average of 7.1 percent, the report says.
Zeltner, who was speaking in a video conference from Hong Kong, said UBS will be hiring hundreds of relationship managers every year globally.
“Hiring in Asia will be higher than the rest of the world,” he said.
Kathryn Shih, CEO of UBS wealth management Asia-Pacific, said the bank aims to increase the number of relationship managers to 1,200 from 900 in the medium-term.
UBS competes against Citigroup and HSBC , the two leading players in Asia, but is also facing intense pressure from new boutique players and Asian private banks.
Zeltner, who became CEO of the wealth unit in early 2009, said he sees consolidation in Asia’s wealth management industry in the next few years as not everyone will be making money given the high cost of entry.
“If over time people cannot prove it is a sustainable, growing, profitable business, then you will see consolidation,” he said.
“A lot of people look at Asia as a very attractive market but I don’t see many who make money here yet.”
Zeltner said the wealth management unit is accelerating investments in Asia and emerging markets such as Brazil.
But he tread a cautious line on the Middle East, from where inflows from rich clients to the private banking industry have slowed following the Dubai debt crisis, and the recent eruption of political tensions in the region.
“The geo-political challenges in the region do have an impact on clients,” Zeltner said. UBS was not slowing down its investment spending in the region but neither was it accelerating that, he added.
Zeltner said he expects Asia to strongly contribute to new new money flows in 2011.
Clients rattled by huge writedowns on toxic assets and a US probe into wealthy Americans using secret Swiss accounts to dodge tax had pulled nearly 400 billion francs from the world’s second-largest wealth manager in recent years.
UBS has a mid-term goal to increase the gross margin on invested assets to 100 basis points as it sees increasing investment activities from wealthy clients, Zeltner said. The margin was 92 basis point in the last quarter.
Shih, who has been CEO of the Swiss bank’s Asian wealth unit since 2002, said clients have begun to reduce their cash levels and are looking for opportunities to invest.
“Cash is no longer king with a lot of inflation creeping into Asia-Pacific now from food prices and from real estate prices. It is important that clients have a good return from their investments,” she said.
“Cash levels have come down by half from where we were after the crisis.”
