UBS sees no let-up in wealthy investors holding onto cash in 2014
ZURICH May 6 (Reuters) - UBS expects wealthy investors to continue to park a large portion of their cash in deposit accounts and low-risk assets as they wait for more signs of a broader economic recovery, the Swiss bank said on Tuesday.
The private banking arm of UBS has become a key component of its business after UBS restructured in the wake of the financial crisis, moving an emphasis away from its investment bank to less risky wealth management.
However, the fallout from the financial crisis has also meant as much as 30 percent of investors' holdings are in cash and cash-like assets. This is a setback for banks such as UBS, which earn almost no income from such holdings.
UBS Wealth Management's chief executive Juerg Zeltner said he and UBS Americas' CEO, Bob McCann, agreed this situation was unlikely to change in the near future.
"We both believe our client base will always want to keep a significant proportion of their assets liquid," Zeltner said.
"This is particularly (true) until there is greater visibility on the robustness of the economic recovery."
Zeltner was speaking at the bank's investor day in Zurich on the day UBS announced profits at its private bank fell 7 percent in the first three months of the year to 619 million Swiss francs ($705.17 million), in part due to litigation reserves.
In 2014 UBS is targeting up to 15 percent growth in pre-tax profit from the private bank. ($1=0.8778 Swiss Francs) (Reporting By Joshua Franklin; Editing by Greg Mahlich)