05/08-09   -   Press releases

Union Bancaire Privée records gross earnings of CHF 167 million and expands its expertise in alternative investments and other asset management fields

- Union Bancaire Privée (UBP) has announced gross earnings of CHF 166.9 million (USD 154.5 million) for the first half of 2009, in line with the Bank’s expectations.

- UBP has attracted CHF 4 billion (USD 3.7 billion) worth of net inflows of capital from private clients (+8.64%). Assets under management amounted to CHF 81.63 billion (USD 75.58 billion) as at 30 June 2009, compared with CHF 100.7 billion (USD 94.78 billion) at the end of 2008. This figure reflects both the contraction of the alternative asset management industry, which started in the last quarter of 2008 and lasted throughout the first half of this year, and the flow of assets into traditional investments.

- Thanks to its conservative risk and balance sheet management, UBP’s financial foundations are still strong, with a Tier 1 ratio of 24.9%.

- UBP is expanding its know-how in both alternative and traditional asset management by hiring senior talent and launching new products.

“UBP’s adaptability has enabled it to rise to the current challenges and to maintain its earnings capacity intact amid the current market turmoil and lack of stability", says Guy de Picciotto, the Group’s CEO. “Over the first half of the year, we focused on preserving our clients’ capital, recruiting top-flight talent, seizing new investment opportunities and curbing our costs. We also revised our business model. The decisions taken pave the way for the Bank’s future and confirm our long-term commitment to our clients."

Preservation of capital and profit margins

With its strategy aimed at preserving capital, seeking out new investment opportunities, broadening its product range and limiting costs, UBP recorded a gross profit of CHF 166.9 million for the first half of 2009 (53.6% down on the first half of 2008). This fall is essentially ascribable to divestments from alternative investments and to negative effects from exchange rate transactions.

Amid the extreme volatility in stock markets but with a gradually stabilising financial system, UBP is still attracting new clients to traditional investments, with CHF 4 billion in net new money from private clients since the start of the year (+8.64%), not taking into account divestments from alternative investments. Assets under management amounted to CHF 81.63 billion on 30 June 2009, compared with CHF 100.7 billion at the end of last year; this is in line with the contraction of the alternative investments industry, which started in the last quarter of 2008 and took full effect in the first half of this year. The difficult market conditions and this industry overhaul took their toll on assets in the alternative field, which shrank from CHF 45.45 billion at the end of last year to CHF 25.74 billion half way through this year; these figures reflect the worldwide contraction of the alternative asset management industry.

Over the half-year, gross income rose to CHF 419 million, compared with CHF 647 million a year before (-35.27%). Income from fees and commissions totalled CHF 268.3 million (against CHF 457.7 million in June 2008). Trading income amounted to CHF 66 million (CHF 76.9 million in June last year), and are satisfactory given the current context. The cost-cutting measures in all divisions enabled the Bank to reduce its operating expenses by 12.25% to CHF 251.9 million (down from CHF 287 million in June 2008). The Group’s consolidated cost/income ratio was 65% after depreciation. The balance sheet totalled CHF 21.3 billion and the annualised return on equity was 11.7% for the period (compared with 29.1% for the first half of 2008). The reduction of leverage in our clients’ accounts naturally led to a decrease in liabilities.

Strong financial foundations

By maintaining a conservative approach to risk and balance sheet management, the Bank has ensured that it rests on strong financial foundations and has a sound and debtless balance sheet. With a Tier 1 ratio of 24.9%, three times the 8% legal minimum, UBP is one of Switzerland’s bestcapitalised banks. Its liquidity ratio is also very high, more than three times the level required. To fund the incentive scheme instigated by the Bank in March and directed at eligible clients affected by the extensive Madoff fraud, a CHF 110 million provision was made, which was covered by an equivalent write-back of reserves.

Greater expertise

Alternative asset management is still a prised tool in asset allocation and the dislocations in the financial system have created new opportunities. Against this backdrop, the Bank has therefore demanded more transparency of its asset managers, first-rate corporate governance and a strict separation of asset management, administration and custodianship. Moreover, the Bank is adding to its traditional products, specifically in its bond and equity ranges. Dynamic asset allocation aiming at preserving capital whilst being ready to spot the best entry points in the new investment regime that is taking shape is at the core of our strategy.

For further information
Jérôme Koechlin – Head of Communications: Tel. +41 58 819 26 40, e-mail jko@ubp.ch

Note to editors
Union Bancaire Privée (UBP) is based in Geneva and is one of Switzerland’s leading private banks. Active in the field of asset management for both private and institutional clients, the Bank had more than CHF 81 billion (USD 75.5 billion) in assets under management as at 30 June 2009 and has a very solid balance sheet. UBP employs some 1,200 people in some 20 locations worldwide and provides a complete range of investment products and services, both in traditional and alternative asset management, with the aim of achieving solid performances and protecting clients’ capital.