Updated Saturday, April 19, 2014 as of 1:04 PM ET
Practice - High-Net-Worth
UBS Courts London Wealthy as Swiss Banks Pursue U.K. Growth
by: Giles Broom
Tuesday, January 14, 2014
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(Bloomberg) -- UBS AG, Switzerland’s largest bank, expects to boost client assets in the U.K. this year even as Swiss competitors try to break into London’s $1.2 trillion private wealth market to help counter withdrawals at home.

UBS forecasts an increase in assets of 4 billion pounds ($6.6 billion) this year, including net new money inflows, Jamie Broderick, head of UBS’s U.K. private bank, said in a telephone interview. The world’s largest wealth manager increased assets at its British unit by 15% to 31 billion pounds in the nine months through September, he said.

A global crackdown on tax evasion has forced the Swiss government to weaken laws protecting client secrecy that have helped transform the country into the world’s largest cross- border wealth-management center with about $2.2 trillion of assets. With European clients pulling money from Zurich to Geneva, Swiss banks are looking to expand abroad.

“The tax situation around undeclared money in Switzerland is clear, while London’s international character is reeling in Swiss wealth managers,” said Alevizos Alevizakos, a London- based analyst at Mediobanca SpA. “Competition is very tough.”

Edmond de Rothschild Group, owned by Baron Benjamin de Rothschild, said in November it hired bankers to attract affluent individuals and entrepreneurs for its private client business in London. Julius Baer Group last year started integrating Merrill Lynch London financial advisers as part of a 2012 agreement with Bank of America, while Credit Suisse Group AG absorbed Morgan Stanley’s U.K. private bank.

WEALTHY BRITONS

Swiss banks are competing with British wealth managers such as Barclays, the U.K.’s second-largest lender by assets. The U.K. has about 1.5 million millionaires, in dollar terms, with 2.4 million residents among the wealthiest 1% in the world, said Phil Cutts, head of Credit Suisse’s U.K. private bank.

We “consider the U.K. as a private-banking market with considerable growth potential,” Cutts said by e-mail.

London’s banks managed 740 billion pounds in assets for wealthy customers at the end of 2012, up from 674 billion pounds a year earlier, according to research firm PAM Insight. The study ranked UBS’s U.K. unit fourth by client assets, behind Royal Bank of Scotland Group Plc’s Coutts, managing Queen Elizabeth II’s funds, Barclays and St. James’s Place Plc. The three banks had combined assets of about 137 billion pounds.

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