UBS's Zeltner sees struggle to grow revenues in current conditions

Private banks will struggle to grow revenue given negative interest rates and restrained client activity, UBS Wealth Management President Juerg Zeltner said on Monday.

"I just don't see this as an environment where you can credibly expect the top line to grow," Zeltner, who is responsible for the Swiss bank's wealth management business outside of the Americas, said at the Zurich leg of the Reuters Global Wealth Management Summit.

Many private banks including UBS, Switzerland's biggest bank as well as the world's largest wealth manager, are looking to cut costs to boost profitability.



Credit Suisse shares touched a record low of 11.61 francs on Monday.

Last month UBS told staff it would change its organizational structure, seeking to cut costs by hundreds of millions of dollars. This is part of a 2.1 billion Swiss franc ($2.2 billion) cost cutting goal by the end of 2017.

"Now, of course, everybody would expect you to then ultimately look at how much flex you have on the cost side," Zeltner said.

Cross-town rival Credit Suisse is aiming for 4.3 billion francs in savings by 2018 as part of a broad restructure under Chief Executive Tidjane Thiam, who took over in July last year.

Speaking at the Summit, the head of Credit Suisse's (CSGN.S) international wealth management division, which covers private banking outside of Switzerland and Asia Pacific, struck a more optimistic tone on revenue growth after encouraging first-quarter numbers.

"Q1 demonstrated, in a very difficult market environment, that we can actually grow top line and I think we're working very hard to continue this momentum at a pace that we started off in Q1," said Iqbal Khan.

FINTECH FUTURE

After coping in recent years with an international tax dodging crackdown led by the United States, Switzerland's big two banks also face new financial technology competitors, often called fintechs, including digital wealth managers.

Sometimes called "robo advisers", these online services such as Wealthfront in the United Sates ask customers questions about who they are and what they are saving for, just like conventional advisers, but then use an algorithm to devise an investment strategy.

Zeltner said UBS was working on a new digital platform which it hoped to launch later this year or at the start of 2017.

"It's not going to be a robo adviser. It's actually an online wealth management offering," he said.

"It'll give you digital access to all of what we have at offer. We target the digital market ... So no human interface, so to speak, but it will be access to UBS."

For the moment, Credit Suisse's Khan saw bigger opportunities in new technology boosting banks' internal processes.

"Robo advice itself is something you cannot neglect as something for your overall strategy, longer term," Khan said, "but I don't want to over-hype the topic either."

Source: REUTERS