UBS’s spin-off of its loss-making wealth management business will not have an effect on its derivatives business which includes structured products, warrants and certificates, according to Travis Miller, head of derivatives distribution, Australia.
The investment bank has a long history of distributing derivatives product and solutions to the external Australian market inclusive of third party private banks, brokers, intermediaries and direct clients, said Miller.
“It is not anticipated that the recent changes will impact the product suite offered or the opportunities to service domestic clients,” he said.
The Swiss bank made the decision to withdraw from the domestic Australian wealth management business following a global review of its wealth management business, but the bank’s equity derivatives/structured products business which includes a range of products for retail investors, Investment Builders, will remain untouched for the time being.
“The decision to cease providing wealth management services in Australia was a difficult one and was made after considering a number of factors,” said UBS's global vice-chairman for wealth management, Alain Robert. “Australia remains of strategic importance for UBS and we will continue to invest in our market-leading investment bank and asset management businesses.”
Robert said in a statement that the wealth management industry is experiencing substantial changes due to increased regulatory and client requirements which have led to increasingly complex operational processes. “UBS’s global wealth management business model of providing holistic client advice has become increasingly difficult to fully operate on a sustainable basis in the local market, which is dominated by a brokerage-based system,” said Robert.
The UBS spin-off was followed by a management buyout led by chief executive Mike Chisholm who will continue to use UBS’s global macro-economic and local equities research and its capital markets deal flow under a new firm, Crestone Wealth Management.
“Our objective is to create Australia’s first independent global wealth manager – combining an in-depth knowledge of local equities with access to the best range of global products including international direct equities, international OTC fixed income, multi-currency accounts, foreign exchange and international margin lending,” said Chisholm in a statement. “We will also be looking at opportunities to continually grow our product offering to suit our clients’ investment objectives.”
Crestone does not have a financial services licence yet but it is expected that it will be operational from this October.
UBS has marketed more than 200 structured products in Australia since 2004 of which 25 products are still live. The majority of the products issued by UBS in Australia are income-based (129 products) followed by growth products (71) and growth and income products (13). The US bank has used the deferred purchase agreement wrapper to sell most of its products (179), although it has also sold 34 warrants and two structured funds.
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