UBS has held talks with candidates to take over running its US wealth management business, according to people familiar with the matter. The leading candidate now is thought to be Robert McCann, the former head of Merrill Lynch’s financial advisory business.
Former Citigroup executive Sallie Krawcheck and Morgan Stanley’s James Gorman has also held talks with the Swiss bank.
UBS is the second biggest wealth management business in the world, and has a substantial US presence that includes 8,000 financial advisors at upwards of 50,000 clients. The bank has been under fire from US authorities for allegedly assisting Americans with Swiss bank accounts evade taxes.
The outcome of a hearing by Judge Alan S. Gold of Federal District Court in Miami on Monday may determine the future of UBS Wealth Management. Some close to the situation have speculated that the Swiss bank may decide to spin-off the business as part of a settlement with the US government. It is even possible that the bank could revive the old Paine Webber brand that the bank retired after it acquired the brokerage.
The ongoing legal issues and losses from UBS’s trading operations have damaged the brand. Serious morale problems have developed among its financial advisors and wealth management clients have been threatening to leave. A team of financial advisers from UBS recently left to join Merrill Lynch, of all place. The Colorado based money managers had $2.1 million in annual production and managed $225 million in client assets.
Both McCann, who left Merrill Lynch after it was acquired by Bank of America, and Krawcheck are considered strong candidates to rebuild the business. Krawcheck is credited with helping clean up Citigroup after its reputation was tarnished by the widespread belief that its wealth management business had been compromised by conflicts of interest. She left Citi late last year after clashing with CEO Vikram Pandit over whether the bank should reimburse clients who it had sold auction rate securities.
McCann may have a natural advantage over other candidates through his connection to Merrill brokers. The culture clash at Bank of America manifests itself on a daily basis, and many brokers may be willing to move to a reinvigorated UBS.
“He could bring over a ton of guys,” one person close to McCann said.
At Morgan Stanley, Gorman has been trying to take advantage of this situation at Merrill. But insiders say Morgan has also been hemorrhaging clients and financial advisers.
A source close to McCann says it is not clear that he would take the position. Most likely any formal decision will not be made until after the outcome of Monday’s hearing in Miami.
UBS’s wealth management business is now run by Marten Hoekstra.
image: Neely School of Business
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