UBS scrambles to calm rich Chinese clients over 'pig' comment: sources

SINGAPORE/HONG KONG (Reuters) - UBS has asked its senior client advisers to call or even meet private banking customers from China who have raised concerns about a comment from one of the bank’s economists that some people interpreted a racist slur, sources told Reuters.

FILE PHOTO: A man walks past a building of Swiss bank UBS in Shanghai, China May 22, 2019. REUTERS/Stringer/File Photo

A reference to Chinese pigs was made in an inflation analysis podcast by UBS global chief economist Paul Donovan, who has since been put on a leave of absence as the bank reviews the matter. The podcast has been taken down.

The Swiss private banking giant has told senior managers to prioritize any concerns on the matter raised by customers in China, a key market for UBS, and to explain its position on the remark and actions taken so far, the sources familiar with the matter said.

“That’s the priority for all the senior RMs (relationship managers) and managers in Hong Kong and Singapore now, just to make sure the clients don’t get swayed by the reactions mostly in the social media,” one of the people said.

“Most of the clients understand and appreciate the actions the bank has taken and they are not going to drop the bank over this, but they do ask questions.”

These efforts come after some industry participants rejected UBS’ apology last week for Donovan’s remarks, criticizing it for a lack of cultural awareness and calling for a boycott.

Donovan had said in the podcast that consumer prices in China had risen mainly due to sickness among pigs. “Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China,” he added, in comments some took offence at because of a perceived reference to people.

UBS lost a lead role on a U.S. dollar bond deal for state-backed China Railway Construction Corp this week, and according to a bank source the decision was taken because of the controversy over the comment.

But UBS has not yet seen any Chinese private banking client exits as a result of the controversy, one of the people said.

The Hong Kong Monetary Authority (HKMA), the banking sector regulator, has also contacted UBS over the incident and asked the bank to keep it informed about the internal investigation, another person said, without giving details.

HKMA said that it would not comment on matters related to specific institutions.

A spokesman for UBS in Hong Kong declined to comment.

China is one of the most important markets for UBS, where the bank’s offerings include asset management, and investment and private banking. UBS was the first, in November, to win approval to control its onshore securities joint ventures.

Bulk of the assets managed by private banks in Asia comes from China that mints two new billionaires every week. With $357 billion of assets, UBS was the top wealth manager in Asia last year, as per Asian Private Banker league table.

UBS saw net new money inflows of $16.3 billion in Asia Pacific over January-March, versus $3.2 billion in Switzerland and $2.9 billion in Europe, the Middle East and Africa.

Reporting by Anshuman Daga and Sumeet Chatterjee; additional reporting by Noah Sin in Hong Kong; Editing by Himani Sarkar and Mark Potter