There have been constant rumors swirling that UBS intends to sell its US wealth management unit. In part, it’s due to the bank’s North American wealth management unit delivering lower returns than its peers and UBS’ wealth management units in other geographies. 

Another factor is that European regulators are reportedly looking to impose increased capital requirements for banks with foreign subsidiaries. The unit has also been underperforming, with profit declining by 31% in Q1 and its cost-to-income ratio more than 20% above UBS’ other geographies. Advisor headcount also declined from 6,147 to 6,079. 

During UBS’ Q1 earnings report, CEO Sergio Ermotti dismissed reports that a sale was on the horizon despite these challenges. He sees a presence in North American wealth management as integral to UBS’ ambitions of being a global bank, adding that “shrinking back to greatness is not a strategy.”

Instead, UBS plans to keep investing in its North American wealth management business, identifying it as a ‘key… growth market’. It believes that over the next 3 years, UBS can shrink the profitability gap with its competitors. Part of its growth strategy is to more aggressively refer investment banking customers to wealth management. 

Finsum: Despite middling results from its North American wealth management unit, UBS dismissed speculation that the unit could be sold. Instead, it plans to invest in the unit and hopes to narrow the profitability gap with peers over the next 3 years.