UBS's Zeltner warns rivals of pitfalls in Asian growth push

ZURICH: The head of the world's biggest wealth manager on Tuesday warned rivals turning to Asia for growth that achieving profitability in the region will prove challenging.

Many banks have looked to build up businesses in the Asia Pacific region to compensate for the sluggish pace of private wealth growth in western Europe and North America in recent years.

But Juerg Zeltner, who runs UBS's wealth management business outside of the Americas, said that making money in the region can be tough. "We've been in Asia for 50 years," Zeltner said at a conference organised by the Finanz und Wirtschaft newspaper.

"I would still not call Asia a home market. We are huge in Asia ... We are growing incredibly strongly and yet it is difficult to grow profitably for a long time in these countries."

Switzerland's UBS is also the biggest private bank in Asia Pacific, according to a league table from Asian Private Banker, with $274 billion in assets under management.

That puts it ahead of the likes of Citi, HSBC and Credit Suisse, though the latter has made expansion in Asia a priority since Tidjane Thiam became CEO a little more than a year ago.

One reason why Asian private banking can be less profitable is that Asian clients often spread their wealth across more banks than European clients.

Much of the wealth in Europe has also been inherited and clients then pay banks to manage their fortunes. In the likes of Hong Kong and Singapore, millionaires and billionaires are more likely to be self-made and take a more active role in managing their wealth, which is less lucrative for the bank.

Zeltner also said that UBS will approach any possible acquisitions with caution and is focused on growing organically. "The most important thing for us is that we grow organically and qualitatively," he said.

Smaller Swiss private banks, which for years benefited from clients bringing money to Switzerland to take advantage of the country's bank secrecy rules, are struggling under a global clampdown on tax evasion and increasing regulatory costs.