UBS sets sights on Asia-Pacific
It plans to raise region’s headcount by 40% in wealth management
By Lee Su Shyan
22 March 2010
After a hellish year at the helm of UBS, chief executive Oswald Gruebel has hit the road to convince Asia that the troubled Swiss banking giant has turned the corner.
He told The Straits Times in an exclusive interview last week that UBS is back on track and making the region a priority.
The 66-year-old German had made his reputation in banking by turning around another Swiss giant, Credit Suisse, and was settling into retirement.
But he was enticed back to the corporate floor to take on the toughest challenge of his career after UBS posted the biggest loss in Swiss corporate history in 2008 while suffering severe reputational damage in the process.
After some painful rebuilding, UBS believes it is time to look ahead. The bank has shored up its capital base and turned profitable in the fourth quarter of last year to the tune of 1.2 billion Swiss francs (S$1.6 billion).
While rich clients withdrew a net 45.2 billion Swiss francs worldwide in the fourth quarter, the Asia-Pacific region was the bright spot with net new inflows for UBS’ wealth management business.
It is no surprise that this region is a top priority.
Mr. Gruebel said: ‘We look at the Asia-Pacific region and we see that here are the biggest growth opportunities going forward in the next few years.’
The bank is planning to increase its headcount in the region by 40 per cent in the mainstay business of wealth management, with plans to boost staff numbers in investment banking and asset management as well.
Mr. Gruebel’s confidence in the region stems from various factors, particularly the rise of China, although other Asia-Pacific economies have also become economic powers in their own right.
‘If you go back to the 1997 crisis, and if you look at today, their currencies have strengthened against the United States dollar. This shows that these countries have been able to generate trade surpluses partly within the region and partly outside the region.’
Population growth will make these economies less dependent on exports, added Mr. Gruebel.
‘That is why we are very bullish on the region and think that it is one of the areas of the world which will have growth in the next few years and in contrast to Europe or America.’
UBS employs about 2,000 people here out of the 8,000 who work across the Asia-Pacific. Singapore and Hong Kong have about 1,000 private wealth managers between them.
Despite the bank’s troubles, it is still one of the leading regional names in finance, not just in wealth management but also in investment banking and asset management.
Asia-Pacific contributed about 17 per cent of the group’s operating income, with Switzerland still bringing in the bulk of the income.
Mr. Gruebel joked: ‘We have been in Switzerland for 150 years. I’m sure that if we had invested here as much as we invested in Switzerland or the US or Europe, it would have been completely different. But we think that it’s not too late.’
He and his executive board have been busy getting the UBS house in order in the past year.
Global banks, including UBS, had been heavily criticised for rewarding bankers with huge bonuses, even when risky trades went wrong. UBS was also badly hit as its investment banking business was overly exposed to the US sub-prime market.
All this has given the turnaround team plenty to work on. Costs have been cut. As well, ‘we have done a lot during the year to improve the organisation, to improve compliance aspects around the world’, said Mr. Gruebel.
Risk management has been improved. ‘Risk management cannot be overruled by anybody, the CEO, the chairman, by anybody,’ he said.
While still empowering staff – allowing them to make decisions, to run and get the business – he stressed that it is clear they know it comes with the responsibility.
Better risk management is just one aspect of what Mr. Gruebel terms the ‘new’ UBS.
Another aspect is a more integrated bank, which has improved efficiency at UBS.
‘You might say, from the outside, that it is an obvious thing to do, but for big organisations, it has its divisions that are doing their own thing,’ said Mr. Gruebel.
‘We are in the process of changing that so that they all work together as one company. You put all that expertise together and we can offer something that no other bank can.’
With the bank’s good name hurt – not only from the losses but by the legal row over clients using accounts to hide money from the US taxman – Mr. Gruebel knows that regaining that much-vaunted reputation is an uphill task: ‘That is not something you can ask for, people have to give you trust.’
Clients remain to be convinced, as do staff.
Departures of top UBS staff from Singapore and elsewhere are still continuing, but at a slower pace than the exodus seen worldwide last year.
Mr. Gruebel said he was heartened by several senior hires recently and that is happening because people realise the opportunity to be with a ‘new’ UBS.
‘They see how UBS is turning itself around and they want to be part of the new UBS.’
Shareholders will also be eagerly awaiting the turnaround.
The Government of Singapore Investment Corporation (GIC), which recently became UBS’ largest shareholder with a 6.6 per cent stake after converting its notes to shares, is saddled with a paper loss of a few billion dollars.
Mr. Gruebel said GIC has said it will be a long-term shareholder, and ‘we will do whatever we can in our power to improve the share price’.
UBS will continue to get private banking money to return, improve efficiency, rebuild and rebrand.
Mr. Gruebel concluded: ‘At the end of this year, if we talk again, I think we will have made another huge step. I hope that we have been profitable all throughout the year and, compared with the other banks, we will also have done well.’