Singapore is drawing more global wealth than ever and UBS, as one of the largest wealth managers around, is riding this trend nicely. “In the past, for every dollar that we received in new assets, 75 cents would go to Hong Kong and 25 cents would go to Singapore,” says Edmund Koh, president of UBS APAC. “Now, it is 50:50.”
However, this is not a result of Hong Kong-based funds fleeing, but rather, due to the “phenomenal” growth of Southeast Asian companies and the region’s potential as an inexpensive economic alternative to China, says Koh. “It is the growth within Southeast Asia itself that has pivoted and driven the growth of wealth management in Singapore… China today is expensive if you are a foreign investor. Within Southeast Asia, you can still pick from Thailand, Vietnam, Indonesia [and more]. Malaysia is at a huge discount, for example,” he says.
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To capture this expanding market, UBS APAC is wooing global family offices (GFO) with an internal joint venture between its wealth management and investment banking teams. “We have 24,000 wealth management clients in APAC; that gives us close to US$600 billion ($800.8 billion) in invested assets,” says Koh. Of those clients, about 1,000 are GFO, contributing between 30%–40% of the figure.
With global wealth management contributing US$1.4 billion of UBS’s US$2.3 billion in net profit for 1QFY2021 ended March 31, Koh is assured that UBS APAC will succeed in courting these ultra-high net worth individuals.
“I would say we are good at the wealth management business, especially GFO. If you look at our clients today, two out of five billionaires in Asia bank with us.” In a nod to August Hatecke, co-head of wealth management in APAC, Koh adds: “August’s job is to make it four out of five.”
UBS, as a whole, reported earnings of US$1.8 billion, up 14% y-o-y. Within the various major markets, APAC contributed 37% of the bank’s profit before tax, up from just 12% five years ago. During the quarter, Asia Pacific recorded its best quarter ever with a profit before tax of $0.9 billion.
From left to right: August Hatecke, co-head of wealth management in APAC; Edmund Koh, president of UBS APAC; Desmond Kuek, divisional vice-chairman of UBS Global Wealth Management and chair of the APAC Sustainable Finance Network
The 1QFY2021 numbers, nevertheless, were marred by a US$774 million loss from trades linked to Archegos Capital in the first quarter, with a further US$87 million in losses expected in the next quarter.
UBS’s new CEO Ralph Hamers has also unveiled plans to cut US$1 billion in spending by 2023, instead of focusing resources to grow its operations in the US and Asia.
Under one new roof
Earlier this year, UBS moved into its brand new office at 9 Penang Road (9PR), which consolidates its wealth management, investment banking and asset management teams into the 381,000 sq ft facility — its largest in the Asia Pacific.
The bank’s 3,000 employees here used to be spread across Former Command House, One Raffles Quay and Suntec City. UBS will retain its technology and operations hub at Hansapoint in Changi. Among the features at 9PR is UBS’s first global Cyber Fusion Centre, a command centre for information security, technology and innovation to mitigate potential cybersecurity risks around the globe.
Singapore is also the APAC headquarters for EVOLVE, the Centre for Design Thinking & Innovation, which focuses on enhancing the client experience, generating insights using analytics, and creating new products to meet the evolving needs of clients.
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9PR is also a visible platform for UBS to showcase its sustainability efforts, which is led by Desmond Kuek, divisional vice-chairman of UBS Global Wealth Management and chair of the APAC Sustainable Finance Network.
The building, which operates on 100% renewable energy, has numerous green certifications. There are electric vehicle charging stations, priority parking for carpool and green vehicles and bicycle parking spaces. With Fort Canning Park right behind, UBS staff cafe will serve herbs and spices grown by an urban farming initiative supported by the bank.
In a sense, UBS’s sustainability efforts are to move in tandem with its clients. “The second-generation [of GFO] are more ESG-conscious; they want to do good and do well. So, the pressure has impacted their investment decisions. If we come up with something more inclusive, it sits very well with the investors,” says Koh.
No longer is ESG only about excluding investments with negative externalities, says Koh, “but including best practices”. “We see the acceleration and pick up in APAC to be quite phenomenal. Family offices are asking for more information; they are more ‘woke’. This is why Desmond’s appointment to that perspective is very important,” he adds.
In the third quarter of last year, the bank launched the UBS Advice Premium (Sustainable Investing or SI), where clients receive daily SI-focused advice and reporting tailored to their preferences. By December, it had already crossed US$300 million in assets under management (AUM).
On a broader scale, UBS’s physical move ties in with its new purpose statement, referenced multiple times by Koh and Kuek: “Reimagining the power of investing. Connecting people for a better world.” “From purpose to strategy to execution, I think there is a lot that we, as a bank, will be doing in the sustainable investing space,” says Kuek.
