After selling its Austrian private bank to LGT last year, UBS is reportedly looking to offload yet another piece of its European wealth activities to the smaller rival. The move raises questions of its wider strategy in the region.

The Swiss wealth giant is in talks with LGT to sell its private banking book in Spain, Spanish daily «El Espanol» (behind paywall, in Spanish) reported on Monday, citing undisclosed sources. Swiss-Brazilian wealth manager J. Safra Sarasin is also interested, the outlet reported.

The news of UBS rethinking its business with Spain's wealthy onshore first surfaced two months ago in «Bloomberg», which reported that many European markets simply aren't large enough to warrant a presence. CEO Ralph Hamers wanted instead to focus more resources on Asia, the world's fastest-growing market for the wealthy, the outlet reported.

Profitable Markets

UBS and LGT just clinched a deal in Austria; the Spanish activities represent a far larger chunk of wealth: it is estimated at as much as 12 billion euros ($14.3 billion). However, the clientele appears to be more fragmented that UBS would like, and range from affluent to super-wealthy. UBS has repeatedly sought to sift these less-wealthy, which it views as less attractive.

Spain is one of just two European markets where UBS is profitable onshore, despite a nearly 20-year effort: Austria is the other. UBS' other profitable markets in Europe are the U.K., the Netherlands, and Luxembourg.

New CEO's Review

The European push figures in a wider strategy review by Hamers, who took over in November. The Dutch banker is looking at 14 primary areas for UBS to become fitter. The European trend isn't encouraging: UBS' Frankfurt-based hub is stagnating.

UBS has countered this with spending cuts as well as investments in efficiency like hundreds of millions for a new booking platform. European wealth boss Christine Novakovic has introduced a more forceful segmentation of clients. The potential sale of the second of UBS' two profitable onshore European activities would indicate the Swiss bank is done trying.