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- McCann, who was brought in to mend the brokerage operation in 2009, is now one of the most powerful executives at the Swiss bank as the importance of his wealth management unit increases.
- McCann, who was brought in to mend the brokerage operation in 2009, is now one of the most powerful executives at the Swiss bank as the importance of his wealth management unit increases.
The Swiss bank said profits in the first quarter rose 7% to 1.05 billion Swiss francs, or about $1.2 billion, from 988 million Swiss francs a year earlier. Analysts were expecting a drop to 838 million francs.
UBS, with CEO Sergio Ermotti at helm, has been undergoing significant structural changes particularly in investment banking where operations have been leaned down. Cost-cutting is also a major priority. In 2012 UBS announced it would fire 10,000 employees in investment banking, and it has already culled more than $300 billion in risky assets from its balance sheet.
While it's been shifting its strategy away from being a pure investment bank, Ermotti has strengthened the role of the bank's wealth management units including here in the U.S. where the Swiss institution houses 7,113 financial advisors.
“If we call ourselves the preeminent wealth management firm globally, then it would be impossible not to be a strong player in the biggest market in the world, the Americas," Ermotti told FORBES earlier this year.
The U.S. wealth management unit is headed up Merrill Lynch veteran, Bob McCann. McCann, who was brought in to mend the brokerage operation in 2009, is now one of the most powerful executives at the Swiss bank as the importance of his wealth management unit increases.
In the first quarter, UBS wealth management Americas reported a record adjusted profit before tax of $284 million. That's up from $220 million from the same quarter last year, and represents some 17% of the Swiss bank's adjusted profit before tax.
Operating income also hit a record with $1.865 billion, that's up 10% from $1.696 billion last year.
Another important metric among wealth management businesses is revenue per financial advisor. UBS has one of the highest with $1.037 million up 8% from last year. Only
McCann and his team are also working on growing its banking capabilities for its financial advisor base. Mortgages are a big part of that; in just over four year the unit's mortgage business has grown balances from less than $100 million dollars in 2009 to over $6 billion at the end of the first quarter 2013. The growth rate is the highest among top 50 U.S. banks and thrifts with 68% between 2012 and 2013.
Today net interest income represents 14% of the unit's revenue, and McCann is looking to get that number even higher. "We are just scratching the surface," McCann told FORBES this morning before presenting at UBS investor day in Zurich.
McCann's UBS counterpart is Jurg Zeltner who leads wealth management outside of the U.S. Their combined units represent about 60% of profit before tax for UBS.
So what's next for the units? Cost efficiency is on the agenda. In a presentation to investors both Zeltner and McCann introduced new cost-to-income ratios. McCann's new target is 75-85% from 80-90%, while Zeltner is aiming for 55-65% from 60-70%.
Meanwhile, UBS said today it is overhauling its corporate structure "to improve resolvability will allow the firm to qualify for a capital rebate under the Swiss 'too-big-to-fail' requirements."
Instead of a single holding company that houses all of its global operations, UBS will create separate entities that will standalone therefore isolating any future problems. For example, In the US,it will create an intermediate holding company to hold all its US subsidiaries.
UBS says the move will result in lower overall capital requirements.
