UBS’s onshore business in Europe was a restructuring case. According to Christine Novakovic, the big bank now earns significantly more there. With finews.ch the European boss also spoke about tough measures and weird corona activities.
The European business of UBS recently emitted ominous signals. So the sale of the branch in Austria to the Fürstenbank LGT, then the persistent rumors of an exit in Spain. Defined UBS CEO for all of this Ralph Hamers on the occasion of his “strategy update” last April America and Asia as future growth markets – and left Europe unmentioned.
Meanwhile, the big bank in the Europe, Middle East and Africa region (Emea), where it is involved in private banking, fund business and investment banking, reported a pre-tax profit of $ 500 million. Only the Americas region earned less in the first quarter of 2021.
Still wants Christine Novakovic in conversation with finews.ch know nothing of a depressed mood in their area of responsibility. On the contrary. “The mood is great, and with the new self-confidence, success comes back,” says the head of onshore and offshore asset management in Europe. At the beginning of 2019, she also took over the management of the Europabank UBS Europe, based in Frankfurt – and thus the supreme command of the individual national companies.
Germany finally profitable
If you believe “Christl”, as the 56-year-old South Tyrolean is called internally, the major Swiss bank is currently having a good run in Europe. “The volatile markets help us, of course, and so does our brand”. UBS stands for financial strength and stability in Europe. These attributes drag in times of crisis. In many cases, existing customers would have recommended the bank, says the European boss. “The new money clearly exceeded our expectations.”
The result: according to Novakovic, Europabank earned significantly more in 2020 than in previous years, and every single country made its contribution. The bottom line is that Germany is ultimately profitable, where UBS has been fighting for black numbers for years. “This year we will top that result,” says the bank manager.
Trend was down
The dynamic is new. UBS Europe’s earnings trend has been down since it was founded in 2016; In 2019, Europabank looked after just 144 billion euros with over 1,900 employees and posted a balance sheet profit of 46.7 million euros. Of the then twelve European country markets, less than half delivered a pre-tax profit. More recent business figures are not available.
“Christl’s hard lot” was the headline «finews.ch» back then. But as it turns out, the banking veteran knew that she was still from the former co-wealth management boss Martin Blessing had been called to her current post to take tough countermeasures. “When I took over the business three years ago, we made clear and sometimes tough decisions and restructured the business,” says Novakovic looking back. Now the bank in Europe is benefiting from these measures.
Focus on HNWI
Her decision to re-segment European private banking from 2020 and to serve affluent customers with assets of up to 2 million euros separately caused quite a stir. This while the focus is now on millionaire fortunes. “We are pursuing a clear strategy in asset management and are concentrating on medium-sized and larger HNW customers between 10 and 30 million euros,” says Novakovic. There is also the super-rich segment, which UBS seeks to address worldwide.
Before that, UBS had concentrated heavily on affluent business in individual European countries – not least in Germany. Since then, the bank has significantly increased the total assets under management per advisor and sent motivated junior bankers to work. In the meantime, this segment is “highly profitable”, emphasizes the European boss. Investments were also made in marketing in order to make the offer more visible on site.
“That moved me a lot”
Doesn’t really fit into the mood of optimism, as the sale of UBS Austria, announced last December, a country market that is making a profit. “The sale of UBS and Austria really moved me a lot because we have an excellent team there and we work profitably,” says Novakovic. Nevertheless, it cannot be assumed that the Austrian business, due to the size of the market and the future potential, will reach the critical size in order to be defined as a strategic market at UBS.
While UBS has marked Asia and America as growth markets, the focus in Europe is on profitability. Internal guidelines apply, for example to the pre-tax profit that a country market should generate – also with a view to the ongoing IT migration. The big bank has created a multi-billion dollar booking platform in Switzerland, to which the European countries are migrating step by step. It’s a laborious and costly process; so far, only Germany and Italy have been “live” on the new platform.
Acquisitions in core markets
Even if Novakovic does not allow himself to be looked at, there are indications that the withdrawal from smaller markets in Europe may well be an option for UBS. Such sales could also raise money for strategic acquisitions in core markets such as Germany, Italy or the UK. According to media reports, the major Swiss bank showed interest in the German private bank Bankhaus Lampe from the portfolio of the Oetker family a few months ago – there was no handshake.
Novakovic does not want to confirm the episode, nor does the Spanish branch intend to sell it.
1 million steps
The head of the market is not deterred by the fact that in Europe the main focus is on fine-tuning the key figures. “I find the gradual increase in profitability and the refining of the business model very exciting intellectually,” she assures me. Novakovic, on the other hand, is worried about the feeling of togetherness at UBS Europe – because of the corona crisis, the offices in London have been empty since March 2020. “With the forced home office, the corporate culture, the pride in our brand, threatens to lose its shape,” fears the European boss.
In order to maintain the exchange, Europabank is testing new, sometimes weird formats. Virtual escape rooms and cooking courses, for example, or sporting competitions such as the “1 Million Step Challenge”. Her team took fifth place there, as the banker reports with obvious pride.
One third in the home office
The national subsidiaries, on the other hand, don’t want to rush into anything when they return to the office. In doing so, they adhere to the group guidelines and the regulations that are sometimes very different across Europe. But even if the working conditions have normalized one day, the European teams of the major Swiss bank will work differently than before: As in Switzerland, it is also planned in Europe that up to a third of the workforce will work outside the office.
As head of Europe, Novakovic has to preach caution and restraint – although she secretly looks forward to seeing them again. “Sure, I miss the personal encounters with my girls and boys.”
How should Switzerland come to terms with the failed framework agreement with the EU?
A new proposal for a framework agreement with the EU is needed.
The existing bilateral agreements should continue to apply.
Switzerland should conclude agreements with the EU in some areas.
Switzerland should distance itself more from the EU.
Switzerland should cultivate closer relations with other countries.