China offers double-digit growth opportunity to UBS's Zeltner

[SHANGHI] UBS Group AGis seeing a "double-digit growth opportunity" in China's wealth-management industry even as the world's second-largest economy slows.

"China is going to grow at two to three times as fast as the rest of the world, which makes it a very attractive growth opportunity," Juerg Zeltner, UBS's wealth-management president, said at the opening of a wealth branch in Shanghai on Thursday.

"Wealth is growing roughly two times the underlying economy, so China for us is a double-digit growth opportunity in our wealth- management efforts."

Chief Executive Officer Sergio Ermotti in January unveiled a plan to double the firm's workforce in China to about 1,200 over the next five years as he seeks a slice of a financial- services market traditionally dominated by Chinese firms. While data on China's economy continued to be mixed since Ermotti's announcement, the government resolved at this month's annual meeting of the legislature to grow output by an average of least 6.5 per cent through 2020.

UBS's expansion in China comes at a difficult time for its wealth-management business, the firm's largest unit, which posted a 47 per cent slump in pretax profit in the fourth quarter. Ermotti said Wednesday the group's wealth management and investment-banking businesses failed to recover in the first quarter as "challenging" conditions continued this year.

The wealth-management business holds a particular allure in China owing to the surging number of millionaires. The country had 1.26 million high-net worth individuals at the end of last year, double from 2010, China Merchants Bank Co and Bain & Co said in their 2015 survey of the country's private wealth industry.

Rich Chinese are increasingly embracing private-banking services, with 65 per cent engaging financial professionals to manage their assets managed, up from 30 per cent in 2009, the survey showed. Besides UBS, companies from HSBC Holdings Plc to Julius Baer Group Ltd also have ambitions to manage more of that wealth.

UBS and Goldman Sachs Group Inc are the only foreign firms that have broad licenses which allow them to offer a full range of onshore private banking, asset management and brokerage trading services in mainland China. Other overseas firms tend to manage Chinese wealth mainly from offices in Hong Kong and Singapore.

The new branch in Shanghai follows the opening of a sub- branch in Beijing in October 2014, according to a UBS statement distributed on Thursday. The Swiss bank also plans to establish its own business university in China.

"Our vision is to be the pre-eminent global wealth manager in China," Edmund Koh, UBS's Asia Pacific wealth-management head, said in the statement. "We will continue to invest in China, both in terms of hiring and in broadening the services and products available to our clients."

BLOOMBERG