UBS is forced to delay the closure of its US private bank, missing its deadline of January 1, 2021 to transfer millions of dollars in loans from international clients to its wealth advisory unit.
The company was due to close its US private bank early next year as part of a cost-cutting exercise in its global wealth management business, as announced to UBS employees over the summer and reported by Citywire.
The plan was to move its US-based private bankers and all US private bank accounts receivable to its wealth advisory unit, UBS Financial Services, by the end of 2020.
However, the group has experienced significant delays due to complications related to the transfer of hundreds of millions of dollars in loans reserved through the US private bank for international clients to its wealth advisory entity, according to sources familiar with the matter.
The Wealth Advisory Unit must perform due diligence on all loans issued to international clients by its US private bank before transferring them, and this work has progressed more slowly than would be required to approve all loans by now. the end of the year, sources said. noted.
The group’s US-based private bankers serve very high and high net worth clients in the US as well as the US and Latin American offshore markets. While private banking, with offices in New York and Miami, caters to both overseas and overseas clients, the majority are offshore.
The same sources were unable to provide an estimate of when UBS might officially shut down its U.S. private bank, but said it could take weeks to clear the backlog of loans that need to be reviewed.
The delay could cost UBS millions of dollars and could also force the company to renew the private banking unit’s banking license for another year, sources added.
A spokesperson for UBS declined to comment.
The backlog of loan transfers stems from how the Swiss company has structured its due diligence and loan issuance process for its international wealth management clients, sources said.
UBS’s US private bank was responsible for booking loans for the international wealth management clients of the group’s US private banking and wealth advisory units. These loans were processed and issued by a dedicated New York-based team within UBS’s U.S. private bank, sources said.
Since the announced shutdown of the US private bank, this responsibility has fallen on the credit team at UBS Financial Services, which until recently focused only on lending to domestic US customers. The group’s domestic credit team must now perform due diligence on every loan granted to international wealth management clients before transferring it to the company’s wealth advisory unit, sources said.
The considerable time and resources required to complete these audits are the source of the backlog.
Many loans are for long-time international clients who have been with UBS for many years, sources added.
Private banker transition
As previously announced, the shutdown of UBS’s U.S. private bank means the company is effectively eliminating the private banker role from its U.S. operations.
The Swiss firm has offered its other US-based private bankers, most of whom serve offshore clients based in Latin America, the opportunity to transition to financial advisory roles within its wealth advisory unit. .
Sources said the majority of his US-based private bankers accepted his offer and successfully moved their clients’ investment portfolios from private banking to advisory accounts.