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UBS had to admit defeat this afternoon. It informed affected employees at Private Banking Europe about a withdrawal from neighboring Austria.
The decision was made to sell nearly 800 customers of the Liechtenstein LGT, according to the official, Christine “Christl” Novakovic, in a memorandum to the staff.
Although the business was profitable, “the sale of UBS was the right decision,” said the European director of the large bank.
The reason is that despite expansion in recent years, “market share has remained comparatively low.”
Only wealth management will be sold, while asset management will remain with UBS. It is unknown what the LGT buyer pays. They agreed to “keep quiet”.
According to information from UBS this afternoon, LGT has almost 9 billion customer assets in Austria, which are served by around 170 employees.
There were about 60 employees at UBS who, according to one source, managed a good 4 billion assets. Authorities have yet to approve the deal, which should be the case in the third quarter of 2021.
Novakovic hailed the change of employees from UBS to LGT as a success. People would create “enormous added value for LGT,” according to internal documents.
In fact, it is an admission of bankruptcy.
The Austrian business was part of UBS Europe SE, the European subsidiary of UBS AG based in Frankfurt, where European customers are booked.
The importance of Europe, its customers and the UBS Europe SE subsidiary will not change, European boss Christl Novakovic told employees.
Europe remains “UBS’s core strategic core business.”
Well, only without Austria.
The sale shows that the bank is operating at too high a cost. While the much smaller Fürstenbank is profitable in Vienna and other cities, the multi’s presence in the neighboring country does not pay off.
Too expensive, too stiff. The plan would only have worked if it had succeeded in dramatically increasing growth. That didn’t work out for Novakovic over the years.
Under the leadership of Commander-in-Chief Iqbal Khan, the bank has concluded that it will no longer be able to do this for the foreseeable future.
For Christl Novakovic personally, the decision means a bitter defeat.
She became director of EMEA in early 2018 and, after a power struggle, had replaced her internal adversary at the top of UBS Europe SE in the summer of 2019.
Now he has to lay down his arms in Austria instead of UBS taking off under his leadership in the east.
