Best Private Bank in Europe - UBS

For UBS, the Swiss bank with one of the world’s most enviable wealth management franchises, 2011 was shaping up to reinforce a solid recovery since the credit crunch. One year earlier, the medicine prescribed by new chief executive Oswald Grübel started to bite. Profitability was restored, staff were visibly more confident and the group even embarked on a flashy worldwide advertising campaign.

After suffering SFr200bn (E160bn) of net outflows in the credit crisis, flows turned convincingly positive this year, showing the pendulum had decisively swung. Money was still leaving traditional Swiss “offshore” accounts, whose owners may have been spooked by fears about bank secrecy. And the results of the group’s expensively built European “onshore” operations were mixed. But all were outweighed by massive net inflows from UBS’s very richest clients – its ultra high net worth individuals – and booming Asia. In the first half, UBS’s private bank excluding the US booked almost SFr17bn of net new money.

The upturn was seen as reward for the efforts of Jürg Zeltner, UBS’s 44-year-old head of wealth management outside the US, and Lukas Gähwiler, his 46-year-old counterpart running Switzerland, to rebuild staff ranks and regain business.

In Switzerland, Mr Gähwiler, a Credit Suisse recruit, was restoring morale and polishing UBS’s image – partly by modernising and redesigning its offices and even sprucing up how client advisers should dress. Mr Zeltner, a former head of UBS Germany, was similarly on course, rekindling morale and contacts, not least with the independent financial intermediaries who funnel significant funds the bank’s way.

Then came September. First, UBS revealed a $2.3bn (E1.7bn) loss at its London operations because of an alleged rogue trader. Then followed the surprise departure of Mr Grübel, one of the world’s most experienced bankers, after a still opaque board meeting in Singapore originally planned as a triumphant recognition of the bank’s recovery but eventually wholly overshadowed by the London events. “There we were, thinking we were back on the right track and then along came this”, says one UBS private banker, who asks not to be named.

Morale has not sunk to the depths of the credit crunch. But UBS private bankers, especially in Switzerland, feel once again they have been let down by their higher profile and better paid investment banking colleagues.

All acknowledge the London events should not have happened, though they take some limited comfort from recognition that all banks are liable to potential criminal activity.

What matters now is how customers react. Internal memos from the board and a parting missive from Mr Grübel attempted to limit the damage to morale, making it in turn easier to reassure concerned clients.

But now, more than ever, all eyes will be on October 25, when the bank reveals its third quarter results – and how much client money may have flowed in or out.