Swiss private banking giant UBS has retained the title of the world's biggest private bank despite seeing its assets under management (AUM) fall 1 per cent over the year.
At the end of December last year, UBS was managing US$1.74 trillion (S$2.34 trillion), down 1 per cent from 2014, noted wealth management researcher Scorpio Partnership, which compiled a study used for the ranking.
Bank of America Merrill Lynch came in second, with AUM of US$1.444 trillion - down 2 per cent for the year, while Morgan Stanley was third with US$1.439 trillion, down 2.8 per cent.
"In the last financial year, the majority of private banking institutions experienced a notable slowdown in AUM growth and a squeeze on operating margins," Scorpio Partnership noted in its report.
Volatile markets have been one major factor hitting private banks' performances. Wealthy clients are also more hesitant, amid the rough investment climate, to place as much money with their banks as they used to.
Amid these tough operating conditions, Scorpio Partnership said bigger private banks did better than their smaller counterparts. "Unlike smaller operators, many appear to have benefited from their ability to reach out and appeal to a wider market," it said.
TOP 3 PLAYERS
AUM of US$1.74 trillion by the end of December 2015 – down 1 per cent from the year before.
2 BANK OF AMERICA MERRILL LYNCH
AUM of US$1.444 trillion – down 2 per cent for the year.
3 MORGAN STANLEY
AUM of US$1.439 trillion – down 2.8 per cent.
The top 25 biggest private banks in the world managed US$11 trillion at the end of last year, representing a 56.3 per cent market share, up from 55.9 per cent in 2014. The top 25 also enjoyed a 33 per cent gain in net new money, even as net new money fell 6.9 per cent for the industry overall.
The market leaders focused aggressively on improving their cost-effectiveness to weather the storm as best as possible, Scorpio Partnership said.
And in spite of the tough times, the industry still has a positive future, it added. An analysis of feedback from private banking clients showed that they still felt positive about their relationships with their banks.
"But private banks will now need to become much better informed on what to do next to generate the best outcomes for client experience from a new assets and growth perspective," Scorpio Partnership added.