ZURICH, July 10 UBS won back the title
of largest private bank in the world as inflows of fresh client
funds surged last year, indicating restored confidence following
the financial crisis, according to a study.
The Swiss bank displaced Bank of America Corp from
the top spot in an annual benchmark compiled by London-based
wealth management consultant Scorpio Partnership. It edged out
the U.S. bank with 9.7 percent growth in overall assets to
$1.705 trillion, compared with 5.9 percent at Bank of America.
The ranking is a coup for scandal-tarnished UBS, which in
October said it would axe 10,000 staff and scale back its
riskier investment banking division in favor of its private
Activist fund Knight Vinke in May launched a campaign to
break up UBS, though a forecast-beating first quarter and the
highest wealthy customer inflows in six years took some of the
sting out of the shareholder's demands.
Overall, private banks won 24 percent more net new money,
which represents a dramatic turnaround. Financial providers to
the wealthy had struggled to win back client confidence in the
wake of the global financial crisis.
However, the inflows have not yet translated to greater
profits, which rose only 5.3 percent, according to Scorpio. This
means private banks must still cut costs to lift profitability.
"The analysis of the data shows there are still signs of
weakness in the model for many operators," Scorpio said in the
Private banks typically sit on a high base of fixed costs,
and in many cases, costly trading arms, so they rely on
transaction fees generated by client trades for income.
This presents a problem when clients remain on the sidelines
and park in cash products, as they largely have done since the
financial crisis despite urgings from their advisors.
The findings come as private banks pull out the stops to
entice the fast-growing ultra-rich segment, which although is
not more profitable than the wealthy sector, makes up for it in
The ultra-rich tend to feed more business to investment
banking and asset management arms by demanding specialized and
U.S. banks Wells Fargo and Morgan Stanley as
well as Switzerland's Credit Suisse round out the top
five in the Scorpio benchmark.