UBS Is Pushing Into Some Risky Territory
Wealth clients are trading more, which should improve transaction income, but earnings growth will rely heavily on lending and structured products.
Thrice-bitten…
Photographer: Qilai Shen/BloombergSergio Ermotti is facing a painful reality. For the third time in three years, UBS Group AG’s chief executive officer is resetting his ambitions for the world’s biggest wealth manager. A big fine in France is clouding the outlook for investor returns because it will make payouts uncertain.
The pressure on profit margins is forcing the $2.6 trillion manager to retool its wealth business — and, crucially, to lend more. While the bank will be stung by the dent to its management team’s credibility, it must be careful not to push things too far with the revamp of the unit under Iqbal Khan, a new, energetic wealth manager lured from Credit Suisse Group AG.