UBS has reportedly begun laying off employees from its Asia private banking business this week as the biggest wealth manager in the area struggles with declining revenues.
As the Chinese economy fights to recover from a housing crisis and a stock market selloff, wealth generation is at a standstill. Even rivals like Citigroup have been laying off workers in the area, particularly at their investment banks.
Impact of Profit Dip
An anonymous source informed Bloomberg that the company would be dismissing around 70 employees, including relationship managers, from their positions by the end of March. The layoffs will mostly affect locations in Singapore and Hong Kong.
The layoffs also include bankers who had previously worked for Credit Suisse as part of the integration process after the acquisition by UBS.
Compared to last year's period, UBS's pretax profit for the Asia Pacific region fell 46% to $97 million, the worst performance among all regions worldwide. The area's cost-to-income ratio also increased, reaching 87.7%. Last December 31, UBS's wealth management staff surpassed all others in Asia with 1,101 advisors.
Last month, according to Bloomberg, UBS CEO Sergio Ermotti warned that 2024 would be a more challenging year due to the impending acquisition of a former competitor and the associated expenditures that will reduce profitability. With the closing of the Credit Suisse merger in June 2023, the lender's staff almost doubled to almost 120,000.
Global pretax earnings for the three months ending in December 2023 came to $381 million for UBS's flagship wealth management operation, far lower than the $1.07 billion predicted by analysts. Nevertheless, the division's net new funding of $21.8 billion was more than expected.
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