Financial Times - Deutsche Bank excluded from UBS issue over poaching spat
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June 25, 2017. Laura Noonan.
Swiss rival shunned after luring Asia-based wealth management staff.
Aggressive poaching in Asian wealth management helped UBS lose its place in Deutsche Bank’s recent rights issue after the German bank learnt its Swiss rival had been trying to use its financial woes to lure staff.
UBS, which had a lead role in Deutsche’s 2014 capital raising, was conspicuously absent from the eight banks named this year to underwrite the €8bn rights issue that finally drew a line under questions about the German bank’s balance sheet strength.
People familiar with the situation told the Financial Times that UBS’s exclusion partly stemmed from a row over Asian hiring practices.
UBS, the world’s biggest wealth manager, hired Deutsche Bank’s most senior wealth management executive in Asia, Ravi Raju, last October.
After he joined, UBS tried to recruit several other Deutsche executives and told some that they should join the Swiss bank because Deutsche “might not be there in a few years’ time”, according to people familiar with the situation.
Lok Yim, Deutsche Bank’s head of Asia-Pacific wealth management, said in June that his division would hire 50 client-facing staff, partly to deal with the “attrition” that it suffered last year.
Senior Deutsche executives in Frankfurt were furious when they heard of the hiring tactics and “sin-binned” UBS from the capital raising, two people familiar with the situation said.
Deutsche and UBS are now rebuilding relations and UBS is pitching to work on the partial sale of Deutsche’s asset management business, one of the people said.
UBS’s London-based investment bank, the division that would have participated in the capital raising, declined to comment.
One banker, who asked not to be named as client relations are confidential, said UBS would have struggled to do the capital raising since it is also advising China’s HNA, which raised its stake in Deutsche Bank to 9.9 per cent from 3 per cent between May and February.
UBS wealth management declined to comment, as did Mr Raju. Deutsche Bank also declined to comment.
Asia is the world’s fastest-growing private banking market with more new wealth created than anywhere else in the world, as entrepreneurs diversify beyond their main business and wealth transitions to new generations.
UBS has been on a hiring spree in the region for the past few years, especially in China, where the bank has stuck by its vow to double its overall headcount between 2016 and 2021, despite mixed growth.
Credit Suisse has also put Asian wealth at the centre of its growth strategy and has combined its Asia-Pacific wealth management and investment bank divisions to offer a broader set of services to clients. Fellow Swiss bank Julius Baer is also in expansion mode.
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