UBS is doubling down on efforts to link its wealth-management business to its investment bank as it targets more middle-market deals (UBS)

  • UBS is making a bigger push to bring together its wealth management division and investment bank, a strategy unfolding in cities around the US and targeting more middle-market deals.
  • The Swiss firm is betting that tapping ultra-rich clients in its wealth division, many of whom have businesses themselves, will result in more chances for its investment bankers to execute deals.
  • The initiative comes as UBS, which focused on building out its sturdy wealth business in the years following the last financial crisis, restructured its investment bank last year to help improve performance.
  • One UBS financial advisor described the effort to Business Insider this way: “If I’m a financial advisor and I have a really good relationship with my investment banking team, I can just call up my guy and say, ‘I have a deal. Can you do this for me?'” 
  • Visit Business Insider’s homepage for more stories.

UBS is on a quest to tap its $2.75 trillion wealth management division’s deep well of ultra-rich clients to help drive more business to its investment bank, deploying bankers around the US to make it happen. 

The Swiss firm is making a bigger push to bring together its wealth management business and investment bank, a strategy unfolding in different cities and targeting more middle-market deals than the firm has in the past.

“In the past, we’ve always been very good as a firm at collaborating between the IB and wealth management, and trying to find those opportunities and convert them into banking transactions,” but those efforts have previously been more “episodic,” Paul Crisci, global head of private wealth markets, told Business Insider.

In effect, the firm is assigning investment bankers to offices around the US dubbed private-wealth service hubs, primarily in some of the country’s most monied cities to support public- and private-company transactions with elite private-wealth financial advisor teams. 

So far, the initiative has been rolled out in six cities — Los Angeles, San Francisco, New York, West Palm, Chicago, and Dallas — with fewer than 10 participating investment bankers across those regions. 

Read more:UBS is rolling out the red carpet for ultra-rich people and family offices who want in on private-market deals

Crisci described his strategy alongside Jennifer Gabrielli, deputy head of the ultra-high-net-worth segment in the Americas for UBS’s private wealth unit, as setting out to achieve some “quick wins.” 

“The thought was, let’s prove out the model with a smart, but prudent investment. Once we have the proof points that the strategy is working, we will invest more. I know senior management will give us the opportunity to do that, or we will adjust the strategy,” said Crisci, who joined UBS in 2015 from Jefferies, where he was the global co-head of technology investment banking. 

Crisci has already worked at the intersection of wealth and private markets for UBS. In July 2019, the investment bank launched a group under his leadership geared toward working across the bank, wealth management, and asset management to cater to investors interested in access to private-market deals, according to a memo reviewed by Business Insider. 

In May 2020, Business Insider reported on the expansion of that group — called Private Financing Markets — due to an increased appetite from clients for alternative investments. This latest coordinated strategy represents further outgrowth of those efforts.

Read more:The head of UBS’s US wealth business explained lessons learned from remote work, and how it landed on Skype as its preferred video-conferencing tool

One UBS financial advisor explained the new effort to Business Insider this way: “If I’m a financial advisor and I have a really good relationship with my investment banking team, I can just call up my guy and say, ‘I have a deal. Can you do this for me?'” 

Expanding investment-banking services could help attract new business, said the advisor, who requested anonymity to discuss the strategy because he was not authorized to do so. 

The initiative comes as UBS, which focused on building out its sturdy wealth business in the years following the financial crisis of 2008, has restructured its investment bank in the last year to help improve slumping performance.

UBS’s wealth management business is among the world’s largest, with most of its financial advisors and assets in the US. It reported a 10% rise in invested assets for the third quarter to $2.75 trillion, which it attributed in part to strong market performance.

The firm’s new chief executive, Ralph Hamers, started in his post at the start of November after taking over from Sergio Ermotti, who has led the bank for nearly a decade and oversaw multiple overhauls of the investment bank.  

SPAC mania aiding the business amid stiff competition 

As this initiative has ramped up this year, a new frenzy around an old type of deal started gripping investment banking: special-purpose acquisition companies (SPACs). They are designed as shell corporations to take companies public outside of the traditional initial public offering process. 

From the start of 2020 through July 31, Goldman Sachs strategists counted 51 SPAC offerings raising $21.5 billion, up 145% from the same period a year prior. Roughly halfway through this year, the number of SPAC debuts had matched the total number of deals completed in all of 2019. 

The boom has helped UBS as it meshes investment banking and wealth management operations. 

“From a client perspective, I’d say the most demonstrative link is around SPACs, which has helped to build our IB presence in that space to quite a notable position,” Gabrielli said in a recent phone interview, referring to underwriting activity. “And it’s a virtuous cycle. Our clients then see that in the marketplace, and we’re getting inbounds on, ‘How can I get involved with your IB around SPACs?'”

UBS has the fifth-highest underwriting volume for SPACs in 2020 among investment banks, according to SPAC Research

For instance, SPAC sponsors in some cases already have wealth management relationships with the firm, and the investment bank then helps those clients raise capital. In May, Business Insider reported UBS was increasing efforts to allocate a greater portion of its SPACs to high-net worth clients and family offices. 

Read more: UBS has started pitching its wealth management customers on ‘blank-check’ companies as the bank looks to tap into a SPAC frenzy

FILE PHOTO: The logo of Swiss bank UBS is seen in Zurich, Switzerland October 25, 2018. REUTERS/Arnd Wiegmann/File Photo


Crisci said the team conducts a weekly call to go over the venture between wealth and investment banking and go through bankers’ pipelines, managing it “the way you would manage a coverage effort in the [investment bank], rather than a sector-oriented coverage effort.”

As UBS makes an effort to target more middle-market deals that are smaller than what the investment bank tends to handle, competitors are executing similar strategies.

Business Insider reported last year that Bank of America’s US-based dealmakers opened shop in six new cities in 2019, including Nashville and Salt Lake City, as part of an effort to boost investment banking fees with smaller deals in markets outside the major US money centers. 

Read more: Bank of America wants to dominate middle-market investment banking. Here are the new teams, hires, and cities it’s adding to make that happen.

Meanwhile Goldman Sachs last year assembled a team of senior bankers dedicated to forming relationships with middle-market private-equity firms and, by extension, their portfolio companies, Business Insider reported

For UBS, expanding its investment-banking presence should help tie together the bank’s long list of services in the eyes of its clientele, Gabrielli said.

“With this level of collaboration, if you’re a client, you just see UBS. You don’t see UBS in ten different silos trying to face off with you for different aims, not coordinated,” Gabrielli said. 

Ultimately, a client is looking at “one UBS,” she said. “They don’t care how we deliver it, just as long as we do.”

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