UBS Is `Constantly Approached' About Asset-Management UnitBy
CFO Gardner says bank remains committed to owning the business
He sees asset management generating significant value for UBS
UBS Group AG is “constantly approached” about its asset-management business as deal-making accelerates in the industry, Chief Financial Officer Kirt Gardner said.
“We’re starting to see some consolidation,” the CFO of the world’s largest wealth manager said at a conference in London on Thursday, adding that the bank remains committed to the unit. “Many banks that are owners of asset managers see it as way to address capital challenges.”
Asset managers are increasingly considering tie-ups as they come under pressure from cheaper index-tracking funds, which are performing strongly as quantitative easing boosts global stock markets. BNP Paribas SA is among firms exploring a deal with Axa SA’s European asset-management unit, people with knowledge of the matter have said, while Standard Life Plc has combined with Aberdeen Asset Management Plc to form the U.K’s largest active money manager.
While UBS is “constantly approached with conversations” about consolidation, it considers itself the “natural owner” of the unit, Gardner said, adding that he sees the business generating significant value over the coming years.
Shares in UBS were little changed in Zurich after rising more than 1 percent earlier. The bank has gained about 3 percent this year.
UBS’s asset-management business has yet to generate 1 billion Swiss francs ($1 billion) in annual pretax profit, a target set for the unit in May 2014. It contributed 7.2 percent to pretax profit, or 452 million francs, last year -- dwarfed by the larger wealth-management and investment-banking operations.
Still, the Swiss bank reported strong inflows in the first half into funds run by UBS asset management. Net new money turned positive in the second quarter and has stayed positive in the last three months, he said, giving the business a tailwind into 2018. More than a third of total invested assets are in passive strategies, the bank has said.
One area with potential for expansion is mainland China, where the unit secured a private-funds license in July, allowing UBS to start managing money for mainland institutional and affluent investors.
UBS itself agreed to sell its majority stake in a South Korean asset-management joint venture to its partner Hana Financial Group Inc., the bank said earlier this month.
On President Donald Trump’s new tax plan, Gardner said it would, in general, be a “net positive” for the U.S. economy. He added that he’s “very optimistic” about his company’s U.S. wealth-management business, an important contributor to profit along with international wealth management and Swiss retail and corporate banking.