MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for April, 2011

Why Oswald Gruebel Should Shut Up

Thursday, April 28th, 2011

The Swiss government is planning new, much stricter regulation for UBS and Credit Suisse (the two “too big to fail” banks in Switzerland). Oswald Gruebel, CEO of UBS, is not amused. While Brady Dougan, the CEO of Credit Suisse is applauding the new regulation, the UBS is implicitly threatening to move out of the country.

So, what is at stake? The Wall Street Journal spells it out clearly:

“Strict by international comparison, the draft law goes beyond the Basel III rules on bank capital. It would require UBS and Credit Suisse to hold at least 19% of risk-weighted assets in total capital, of which 10% would be common equity. By contrast, the Basel III regulations call for just 10.5% in total capital and 7% in common equity.”

The UBS is worried about this competitive disadvantage looking at rivals like Deutsche Bank or Goldman Sachs. In some areas, notably in investment banking, more equity has to be ponied up for risky business which put cost pressure on the bank as equity is expensive. However, these new rules will help the Swiss Banks to regain part of their reputation that has been tainted in the last financial crisis. Especially the UBS has detstroyed billions upon billions through risky subprime deals. In the end only the Swiss government, and ultimately the tax payer, has saved UBS from going the Lehman way. UBS should be grateful that this new law will make clear to the whole world how safe Swiss banks are. A priceless competitive advantage, especially for the wealth management division. At the very least, Oswald Gruebel should stop complaining and threatening the Swiss government who has saved his bank only two years ago.


Hedge Funds Almost Up to Pre-Crisis Levels Again

Tuesday, April 12th, 2011

The hedge fund industry is up and thriving again. Here is an interesting discussion of the topic. Note the fact that investors are still not willing to put pressure on the hedge funds for lower fees. It seems that hedge fund investors’ memory is even more short-lived than expected.

To expand on this topic: research shows that performance fees as used by hedge funds don’t do much to align the interests of hedge fund managers and their investors:

““Thus, our findings suggest that in most circumstances pay for performance alone is not sufficient to align agent and principal interests in the hedge fund industry”


Not Much Improvement on Private Banks’ Webpages

Thursday, April 7th, 2011

Just a quick one on our new report that we have published yesterday: How Wealth Managers Can Win Clients Online. It’s the 2nd edition of a report that we have published 2009 the first time. Overall, not much has changed since then. A few players have improved a lot (like Barclays and Merrill) but most are slow to adapt to the new online environment. We are seeing some progress on social media. More about this here.

We will follow this whole topic as we think that the financial advise business is going to feel a lot of impact from social media over the next 10 years or so. Another interesting thought here on the WSJ blog Wealth report. Some obviously think that social media are REPLACING advisers. Not sure about that, but certainly there will be a lot more pressure through increased transparency.