Long-serving UBS executives and experienced front-line staff are increasingly turning their backs on the institution. There are several reasons at play.
«In garden leave» adorns Sonia Goessi's Linkedin profile. With immediate effect, the executive will no longer be working operationally at UBS. Instead, the private banker joins the executive board of Julius Baer at the beginning of next year, where she'll be responsible for the Swiss and European markets at the Zurich-based company.
Goessi isn't alone in moving from UBS to the «Bears.» Thomas Frauenlob, the global head of business with financial intermediaries at UBS, joins the private bank's management team as head of Intermediaries & Family Offices in April.
Jumping off the Career Ladder
Like Goessi, Frauenlob is a high-ranking and long-standing UBS executive, exceptionally well-connected among a super-rich clientele, and has excellent prospects of climbing the career ladder at what will soon be the world's second-largest wealth manager.
Instead, measured against the $3.7 trillion in Global Wealth Management (GWM) of the combined UBS, both ventured to become a niche player in the profession.
Dangerous Duplications
They're not alone in their decision but in close company with others. In recent months, finews.com reported on the unrelenting stream of Credit Suisse departures, with UBS employees joining the exodus.
This is probably due to overlapping jobs being eliminated after the decision in August to integrate Credit Suisse fully. In Switzerland, it initially looked like former UBS bankers would stand a better chance of getting a job than their Credit Suisse counterparts. Recently, three former Credit Suisse executives were included in the ten regional management positions in Switzerland. This likely didn't go unnoticed within UBS ranks.
Even Small Banks Land a Coup
It's striking to see departures in private banking, where UBS claims a leading worldwide role. Even smaller firms are benefitting, as the example of Piguet Galland shows. The private banking subsidiary of the Cantonal Bank of Vaud succeeded in luring no less than seven client advisors from the combined bank, two of whom previously worked at UBS.
Competitors are also finding UBS specialists for foreign markets, as in the case of long-time banker to the super-rich Urs Buechi, who now heads the German private banking operations of British Schroders from Zurich. As the Zurich financial blog «Inside Paradeplatz» reported, ten client advisors are said to have resigned from UBS's Middle East desk in Geneva.
Greener Grass?
While unconfirmed, it shows to what extent internal restructuring at the combined bank can be expected. But it's a fact that UBS has recently reappointed the operational management in the business with the petro-billionaires from the Middle East.
It's entirely possible that for some dynamic UBS bankers, the grass looks greener elsewhere. UBS CEO Sergio Ermotti wants Credit Suisse to disappear by 2025 and complete the integration in 2027, making it clear the bank will be heavily focused on the merger until then.
Some are unlikely to wait and see what happens.
«Life is too Short»
Mara Harvey, a long-time UBS executive who left before the Credit Suisse takeover, now heads the Swiss and European business of the Liechtenstein-based VP Bank. In a recent interview with finews.com, she said that with every merger, the organization is busy with itself for at least 18 months. UBS's leadership is looking at four years of integration, but «I think life is too short to spend four years dealing with yourself,» Harvey said.
UBS succeeded to some extent in stopping the outflow of funds from Credit Suisse in the second quarter, but it's still unclear how clients of the two banks will position themselves. This also applies to private banking, where wealthy individuals will be careful not to park too many assets with a single bank. The competition senses an ample opportunity.
The Second Wave
In May, Julius Baer chairman Romeo Lacher thought a second wave of asset outflows at UBS was possible. «Advisors are considering leaving the bank for competitors. Once they are ready for the move, they will try to take their clientele with them.»
If UBS executives and client advisors with big books turn their backs on the bank, the groundwork would be laid for a further exodus of clients.
Top Executives Hired
To be sure, in recent months, various senior managers with customer contacts joined the company. Since mid-March, UBS has appointed over a dozen front office managing directors, including Jin Yee Young, who returned as co-head of GWM in Asia Pacific.
Giovanni Ronca, who has led GWM in Italy since September, and Ulrike Hoffmann-Burchardi will move to GWM's chief investment office at the end of the month.
Bucking the Trend
Ermotti is determined to stand in the way of customer churn. Still, even he must bow to the constraints of diversification, acknowledging it will be almost impossible to get everything back. Still, the goal is to get as much back as possible, he said recently of assets already flowing out of Credit Suisse.
The question now is how UBS will respond to opening gaps in its ranks in the future.
