UBS to return to wealth management in Australia on back of Credit Suisse assets

UBS intends to retain Credit Suisse Australia’s lucrative private banking operations, as part of the global takeover.

UBS wants to retain Credit Suisse Australia’s private bank, despite exiting the local wealth market some years ago. Picture: AFP

UBS intends to retain Credit Suisse Australia’s lucrative private banking operations, as part of a takeover of the beleaguered firm globally.

Sources have told The Australian UBS’s local leaders would use the takeover of Credit Suisse to re-enter the Australian wealth management market, even after exiting its own division in 2015-16.

“It’s (private banking) core (to UBS globally). UBS will be re-entering the wealth sector here,” sources said on the basis of anonymity.

UBS has started the process to seek approvals from the Australian Prudential Regulation Authority and Treasurer Jim Chalmers for the Credit Suisse takeover. Until then, and the transaction’s global completion, the firms will run separately and continue to compete in areas they both operate in, such as investment banking.

A UBS spokeswoman declined to comment.

Last weekend, UBS agreed to buy Credit Suisse for more than 3bn Swiss francs ($4.9bn) in Switzerland in a transaction pushed by the Swiss government and regulators.

The historic transaction prompted immense speculation about how the transaction would play out in Australia, particularly as it is one of two markets globally where UBS does not operate in wealth management. The other market is Brazil.

The uncertainty about the ownership of the private bank prompted outflows of about $1bn from Credit Suisse’s Australian private bank in the past week, as customers thought it best to move their funds. Rivals have also been targeting customers to capitalise on the situation.

UBS agreed to a management buyout of its Australia’s private wealth arm in 2015-16 after a tumultuous period for the operations, including a regulatory enforceable undertaking. That business was also built around a commission sharing arrangement with advisers, which weighed on profitability.

In contrast, Credit Suisse’s local private bank operates a salary and bonus model for employees and has been profitable for nine years.

National Australia Bank this week outlined it would take a look at Credit Suisse’s domestic private bank if it were to come up for sale.

NAB’s private wealth executive Michael Saadie signalled the lender’s potential interest in buying Credit Suisse’s local private banking arm, should acquirer UBS choose to offload it rather than wade back into that market.

Credit Suisse’s Australian private bank has an enviable list of ultra-high net worth clients with an estimated $28bn of assets under advice.

The Credit Suisse takeover has, though, created angst about local jobs cuts in the investment banking and trading divisions given UBS’s already large Australian presence. UBS is understood to be assessing plugging any gaps the firm has while also reviewing large areas of duplication.