After a month of review, UBS Group AG UBS is spinning off its Australian Wealth Management unit through a management buyout. The unit’s chief, Mike Chisholm, will lead the spun-off unit, establishing it as a new firm – Crestone Wealth Management.
Decision to move away from Australian wealth management operations is, however, contradictory to UBS Group’s strategy of expansion in the broader Asia-Pacific region. This included the target of 15% annual growth in wealth management assets.
Nonetheless, the company’s decision to spin off the unit stems from a number of factors. Some of these include increased competition from local brokerage firm, a rise in compliance costs and stricter domestic regulations.
Notably, many senior advisors at UBS Australia Wealth unit have already joined Crestone. Others are granted a two-day period to decide whether they want to join the new venture or seek redundancy.
Crestone, expected to become operational by October, will be providing a wide range of products. The firm plans to offer its clients an information-technology platform with real-time data and portfolio reporting. Further, Crestone will have its own financial service license and would be assigned an AAA custodian ranking from a banking institution. Notably, the firm will continue to have access to UBS Group’s global macroeconomic and local equities research.
Despite withdrawal from Australia’s wealth management operations, the country remains strategically important for UBS Group. Hence, the company would continue to expand its investment banking and asset management operations in the country.
Currently, UBS Group sports a Zacks Rank #1 (Strong Buy). Other foreign banks worth considering include HSBC Holdings plc HSBC with the same Zacks Rank as UBS Group; while Barclays PLC BCS and Canadian Imperial Bank of Commerce CM hold a Zacks Rank #2 (Buy).
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