UBS’s decision to focus on wealth management paid off last year as the Swiss bank retained its position as the world leader in the sector and saw assets under management jump 15.4 per cent to $1.96tn.
The bank benefited from strong market conditions that drove growth across the sector. Overall the largest 25 wealth companies saw their assets grow 11 per cent on average, according to Scorpio Partnership, a wealth management-focused research group.
UBS did especially well because of its expanding emerging market client base, which accounted for a quarter of the £37bn of inflows it received last year.
Sebastian Dovey, managing partner at Scorpio, said: “UBS is a multi-onshore global private bank and its brand, franchise and business reach pays. Anecdotally in [the Asia Pacific region], most banks point to UBS as a machine that is collecting the most assets.”
UBS’s growth comes after Switzerland’s largest bank by most measures decided almost two years ago to refocus on its core wealth management business while cutting back its troubled fixed-income trading arm.
Bank of America, which sold its international wealth management operations to Swiss private bank Julius Baer two years ago, remained in second place after seeing its assets increase 12.5 per cent to $1.9tn.
“The rising tide in markets helps all institutions as their asset base will grow whether clients are satisfied or not,” Mr Dovey said.
The only wealth manager in the top 20 to have seen its assets fall was HSBC. The UK bank fell two places in the ranking to eighth after its assets shrank 4 per cent to $382bn.
The decline is largely because of HSBC’s decision to pull out of non-core markets, which analysts said has been triggered by its efforts to reduce risks from money laundering and tax evasion.
“They have shed a lot of assets as they want to know all their customers. They are de-risking the book,” said James Chappell, analyst at Berenberg.
HSBC has disposed of operations in Luxembourg, wound down its Irish private banking arm and took a writedown on the goodwill of its business in Monaco. This year, it also sold a $12.5bn portfolio of Swiss private banking assets to Liechtenstein’s LGT Group.
HSBC said the reshaping of the private bank was now “largely complete” and that the focus was shifting back to growth.
Mr Dovey said there was scope for higher growth levels across the sector in 2014. Scorpio estimates that wealth managers have only penetrated 40 per cent of the total available opportunities. Roughly 60 per cent of potential wealth assets still sat with retail banks and asset managers, Mr Dovey estimated.
Although the average cost to income ratio across the largest 25 wealth groups increased 3 per cent year on year to 83 per cent, profits were up 2 per cent.
Costs have increased in part because of new regulation, as well as consistently high salaries for private bankers, according to Mr Dovey.
“It is an open question [as to whether there are] too many private bankers for the scale of these businesses,” he said.