Tuesday, September 23, 2008

Clients move assets worth $6b from Citi, UBS to Deutsche

23 Sep, 2008, 0214 hrs IST,Mohit Bhalla, ET Bureau

NEW DELHI: The crisis of confidence triggered by the subprime mortgage meltdown has adversely hit Citi and UBS' wealth management businesses across the Asia-Pacific region, resulting in a movement of client assets of $6 billion to rival Deutsche Bank. 

Sources at Deutsche Bank have told ET that UBS and Citi clients have moved assets worth $6 billion to Deutsche Bank's private wealth management (PWM) division in Asia Pacific in the past eight months. This could imply that the loss to these banks is likely to be much higher as their clients would have moved their money to other banks as well. 

This asset movement might have been triggered by an erosion of high net worth investors’ confidence in Citi and UBS, which have written down over $47 billion and $42 billion, respectively, in subprime losses. 

Officials at UBS’ APAC headquarters in Hong Kong refused to comment when contacted by ET. Citi Private Bank, Hong Kong, did not respond to a detailed mail and repeated phone calls. Deutsche Bank confirmed that the inflow of assets but declined to divulge from where they came. 

Both UBS and Citi have disclosed asset outflows in wealth management to the tune of $15 billion and $11 billion, globally. However, these findings reveal that the impact on the Asian business, considered a growth driver by both banks, has been quite significant. Both these banks don't disclose AUM's on a region-specific basis. 

These events have taken place in the backdrop of high profile management exits from UBS and Citi to rival institutions in the past 18 months. Early last year, Ravi Raju, who was the head of Asia Pacific investments for Citi Private Bank, moved to Deutsche Bank PWM as regional head for Asia Pacific along with a team of 18 bankers. 

Soon after, Anurag Mahesh, head of structured products for Asia Pacific at Citi Private Bank, moved to Deutsche PWM as head of global investments and sales for Asia Pacific. Sources suggest that this team has moved a large proportion of Citi's assets and clients with them. 

In July, Kaven Leung, chief executive of Citi global wealth management in APAC, which includes Citi Private Bank and Citi Smith Barney, also resigned. UBS, which draws 40% of its revenues from wealth management, has also lost senior bankers including Marcel Kreis, who was head of UBS global wealth management in south-east Asia and Pacific including Australia and onshore Japan. He moved to Credit Suisse as head of wealth management for Asia Pacific last year along with his team. 

With Asian economies like India and China emerging as the fastest growing HNI markets in the world, Citi and UBS cannot afford to lose clients in this region. It remains to be seen how these developments impact UBS' plans to set up its onshore wealth management business in India, a decision they have been deferring for the past two years. In the meantime, the fate of Morgan Stanley, which recently announced the launch of private wealth management services in India, and Merrill Lynch, hang in balance.

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