BANK OF AMERICA(BAC) IS NOW THE LARGEST WEALTH MANAGER IN THE WORLD - OVERSEES $1.5 TRILLION IN ASSETS!!!
By Daniel at 5 July, 2009, 7:43 pm
BofA knocks UBS off top spot in private banking league
By Ellen Kelleher in London
Published: July 5 2009 20:03 | Last updated: July 5 2009 20:03
Bank of America has overtaken UBS in the private banking league tables following its tie-up with Merrill Lynch.
It is now the world’s largest wealth manager, overseeing $1,500bn in assets, according to a survey by Scorpio Partnership, a London-based market research group monitoring the wealth management sector.
The rise in the rankings of BofA, which still conducts most of its business in the US, underlines the scale it acquired from the Merrill Lynch merger.
It also highlights the difficulties UBS is facing in the economic slowdown. Having suffered dramatic outflows from its private banking activities in slumping markets, the Swiss bank’s assets under management fell to $1,500bn last year from $1,900bn in 2007, according to the research.
“The confidence and swagger of the UBS culture has been dented badly,” said Sebastian Dovey, managing partner with Scorpio.
“But UBS is a tanker and while in a tough storm like this one it can seem to take ages to react, it is turning around.”
Poor market conditions still hamper investment performance.
And according to Scorpio’s estimates, private banks now oversee $14,500bn, having seen a fall of 16.7 per cent in assets from the previous year. The profits of private banks fell a median of 32.9 per cent last year while the industry’s efficiency levels also took a hit, with its cost-income ratios worsening to 72.4 per cent on average, from 63.7 per cent in 2007, according to Scorpio’s research.
“2009-2010 will be a moment of truth for the global private banking model,” Mr Dovey said.
“Asset levels have declined and cost-income ratios have risen, which places huge strain on the models of many competitors.
“The way through will be an intelligent focus on profitable segments and efficiency drives.”
Due to its merger with Wachovia, Wells Fargo, which manages $1,000bn, also made its debut in the list of the top 10 private banks, as did rival Goldman Sachs.
Goldman saw benefits from the more favourable exchange rate for US dollars as well.
Though reports of job cuts in the sector were rife last year, a number of banks opted to add staff.
This was particularly the case in their sales departments.
The ratio of companies hiring in 2008 to those which sacked employees was four to one, according to Mr Dovey’s calculations.
The study also uncovered scant evidence of dissatisfied investors looking to vote with their feet and transfer funds to other asset managers in a “flight to quality”.
Instead, many chose to restructure portfolios and increase their cash holdings.
Swiss banks also fared better than expected – with UBS reporting $4.95bn in ordinary profits – the highest of any bank surveyed.
“The Swiss banks are actually, in relative terms compared with other banks, doing similarly and possibly better,” Mr Dovey said.
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