UBS merges two divisions in pursuit of ultra-rich clients
New venture will combine capital-markets teams across wealth management and the investment bank in the U.S., according to memo.
UBS Group AG is starting a new venture at its U.S. operation, marrying its wealth-management unit and investment bank to capture more deals and trading activity among its ultra-rich clients.
The move will merge capital-markets teams across wealth management and the investment bank in the U.S., while creating a single trading platform for all clients in the Americas, according to a memo sent to staff on Thursday. Mark Sanborn, Dylan Roy and Reinhardt Olsen will jointly oversee the strategy, and the changes will be phased in during the third quarter.
(More: UBS says wealthy clients add $22 billion in Q1)
UBS has long been trying to wed the two divisions and lean on one of the world’s largest wealth managers, which oversees $2.4 trillion in assets, to help counter weaker deal fees. It created its Global Family Office unit almost eight years ago to sell the firm’s funds and dealmaking advice to its wealth clients. Rival investment banks, such as Goldman Sachs Group Inc. and Morgan Stanley, are also leaning on their units that manage funds for the ultra-rich, often selling companies for wealthy clients or courting money for closely held firms.
The revamp is “focused on spurring growth — particularly in our ultra-high-net-worth, middle-market institutions and public finance businesses,” Tom Naratil, co-president of global wealth management, and Rob Karofsky, co-president of the investment bank, said in the memo.
The wealth-management unit also has many clients in the middle market, an area where Goldman in particular has said it’s also trying to expand advice as big-ticket mergers and acquisitions begin to slow after years of setting records.
UBS said earlier Thursday that revenue at the investment bank tumbled 27%, hurt by fees tied to equity underwriting and merger advisory. Global wealth management was down 9%, but the unit attracted $22.3 billion of net new money, led by wealthy clients in the Asia Pacific region. Both divisions reported disappointing results earlier this year, missing consensus estimates for the fourth quarter of 2018.
(More: Advisers with $876 million in AUM join UBS from U.S. Trust)
Other takeaways from Thursday’s memo:
Mr. Sanborn, head of investment platforms and solutions for wealth management in the Americas, and Mr. Olsen, Americas equities chief, will jointly supervise institutional equities and regional institutional sales, as well as family offices. Mr. Roy, head of Americas foreign exchange, rates and credit, will focus on fixed-income trading. That unit posted a surprise jump in the first quarter globally. “Many of global wealth management’s most sophisticated clients need the kind of institutional capabilities that the investment bank can provide,”Mr. Naratil and Mr. Karofsky said in the memo. “This new partnership will make us a more aligned and more effective organization.”
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