Swiss bank UBS is open to deals for its asset management business, its chief executive said on Thursday, a nod to the general pressure money managers are under to grow as they cut fees to compete with rivals.
Chief Executive Ralph Hamers said during an industry conference held by Bank of America that if other players offer capabilities that can improve the asset management unit and address weaknesses, UBS will examine them.
"But it's not like we have a situation in which we need to do it because I feel that we have scale where it matters," he said, adding that if another firm can "add to our capabilities and add to the scale, then that will be very good for us, and we will certainly take a look at it."
UBS remains a giant of money management: Its asset management business, run by Suni Harford, oversaw some $1.1 trillion in total invested assets as of June. The bank's wealth division, among the world's largest, has $3.2 trillion.
But the largest asset managers have ballooned in recent years - the world's largest is BlackRock, with $9.5 trillion - as investors sought out low-cost passive funds in a shift that has left relatively small players looking for ways to grow.
That fee pressure has intensified in recent years. The average expense ratio fund investors pay is half of what it was 20 years ago, from 0.93% to 0.41%, according to Morningstar data published in August.
Many firms are now weighing the possibility of combinations to maintain scale, Credit Suisse analysts said in a note to clients in June. There was already a flurry of activity in the works: Last year, Franklin Templeton acquired Legg Mason. And Morgan Stanley acquired Eaton Vance, a deal the investment bank reportedly beat JPMorgan to, underscoring the intense competition for building out money management businesses.
The Wall Street Journal reported in December 2020 that UBS and State Street were in talks to merge their asset management businesses and had held discussions since early 2020, citing people familiar with the matter. Last week, the Journal reported State Street was in talks to merge with Invesco, which manages some $1.5 trillion. The companies declined to comment to Insider on the reports.
"I think that opportunity is there," Harford said in March during an industry conference, according to a transcript from research provider Sentieo. "But I'm not sure I'm running after a lot of the kind of activity that you're seeing out in the market currently, in terms of taking on someone who's about half our size and in a market that we're already in."
Source : https://www.msn.com/en-us/money/companies/ubs-ceo-ralph-hamers-says-hes-open-to-deals-to-expand-its-241-trillion-money-manager-as-industry-m-26a-ramps-up/ar-AAOMhxu590