ZURICH: UBS Group AG suffered a net 15.2 billion francs ($15.2 billion) in withdrawals during the final three months of last year, in part because investors moved money out of Switzerland before the government shares their data with tax authorities, a trend that’s expected to continue this year.
The bank fell as much as 3.9 percent in Zurich trading, pulling other wealth managers lower, after saying all of its money management units saw net redemptions last quarter. UBS made just 73 cents in revenue on every $100 it oversees in wealth management, the lowest in the bank’s history, according to analysts at Citigroup Inc. led by Andrew Coombs.
The snag is that the outlook could disappoint even though client surveys point to rebounding confidence. In investment banking, UBS is less exposed to the United States than its rivals and more geared towards Asia, which is underperforming. Wealth management transaction fees could bring in more money in America if the recent rally in U.S stocks spurs clients to rebalance their portfolios. But they may not rise much elsewhere.
There are other risks. One is the potential for litigation as countries force UBS and other private banks to ditch investors’ assets that do not comply with tax rules. It bodes ill that the European Court of Human Rights this month rejected the Swiss bank’s appeal against aspects of a French government case.
UBS looks doubly exposed to fickle markets, since U.S. President Donald Trump’s policies will dictate whether American investors’ animal spirits persist. With UBS shares trading around a third above their estimated 2017 tangible book value – and in line with purer U.S. plays like Morgan Stanley or Goldman Sachs – the Swiss bank looks fully priced.
