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The mega-merger of UBS’ flagship wealth business was meant to enliven the Swiss bank’s shares. Instead, 18 months on, the move raises more questions than answers it provides.

Eighteen months after a wealth management and former Paine Webber brokerage merger, some investors are disappointed that UBS hasn't made more of its $2.3 trillion asset powerhouse. The unit delivered just shy of half the bank’s total pre-tax profit last year when stripping out spending that the four divisions share.

The Swiss bank’s stock has languished against all-time highs in the wider Swiss market. Analysts are stepping up their questions over UBS’ wealth strategy as a result.

Optimize Returns

The unit is now co-led by UBS «lifer» Tom Naratil, most recently the bank's finance chief, and by Martin Blessing, the former boss of troubled Commerzbank.

«Is this the right business model to optimize returns, and could the profitability potential of the group decline further from here?,» a team of Barclays analysts led by Amit Goel asked in May. To be sure, the private bank is a reliable contributor to profits ($863 million in the first quarter– a highly efficient Swiss wealth unit helps).

«No Plan»

However, its 80.5 percent cost-income ratio in 2018 highlights its unwieldiness (Naratil and Blessing’s goal is under 75 percent). Meanwhile, several managing directors – including chief lawyer Maria Leistner; Swiss wealth planning head Andreas Raquet; and Oliver Banz, the right-hand to super-rich head Joe Stadler for less than two years – have left or said they are leaving. All three didn’t comment to finews.com.

Inside the unit, bankers are venting their frustration over what they perceive as a lack of strategy. «There is no plan except cost-cutting,» one recently-departed senior executive said. «There is a real sense of drift,» according to another. A UBS banker acknowledged the importance of spending cuts, but highlighted investments to better win ultra-rich clients, and expand in Asia and Latin America, for example. UBS didn't comment.

U.S. Wealthy Efforts

UBS said in April it wants to add another $300 million in spending cuts, to a $600 million goal disclosed last year. It also said it wants to push more initiatives with the wealthy, like families, ultra-rich (those with at least $50 million), and American expats. Since the merger in January last year, new initiatives have slowly been introduced.