Thu, Nov 01, 2018 - Page 10 News List

UBS is considering asset management acquisitions

Bloomberg

UBS Group AG is weighing acquisitions and joint ventures for its asset management business to help it compete with larger rivals, people with knowledge of the matter said.

Targets could include UK and US asset managers focused on retail clients, and specialized asset managers in areas such as real estate, the people said, asking not to be identified because the deliberations are private.

Senior executives at the Zurich-based bank think the US$800 billion asset manager needs more scale to compete internationally, two of the people said.

The bank is unlikely to make any single very large acquisition, the people said.

Building scale has become a key topic for asset managers across Europe amid sustained pressure from larger, more technologically advanced US rivals who can undercut their fees.

Recent consolidation in the industry has included the combination of Standard Life PLC and Aberdeen Asset Management PLC.

UBS has enough capital buildup to consider deals again after shunning acquisitions, the people said.

UBS declined to comment.

Asset management unit head Ulrich Koerner has been overhauling the unit since 2014, disposing of assets and pushing into passive-strategy products, which now account for nearly 40 percent of assets managed.

That has helped reverse outflows, but reduced margins. Pre-tax profit in the six months through June was lowest in two years and less than 5 percent of UBS’ total.

Koerner, at the bank’s investor day in London last week, said that the unit could consider deals after not being in a position to do so for years, although the principal strategy remains organic growth.

He said he expects companies managing between 50 billion and 500 billion Swiss francs (US$49.8 billion and US$497.7 billion) are most likely to be bought as the industry consolidates.

Koerner increased job cuts earlier this year.

The unit eliminated at least 100 positions in areas including distribution, one of the people said, asking not to be identified because the cuts are private.

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