UBS unveils surge in assets as rich return

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UBS announced a surge of new money from rich clients at its wealth management arm yesterday as the Swiss giant's core business continued its recovery from the financial crisis.

An inflow of SFr11.1bn (£7.7bn) in the first quarter of the year far oustripped expectations and was the most money the bank had attracted since the end of 2007. UBS highlighted strong new business from Asia Pacific, other emerging markets and the international super-rich but it continued to suffer outflows in Europe, where governments have been clamping down on tax evaders using secret Swiss accounts.

The world's second-biggest wealth manager said client trust was returning after massive losses prompted wealthy customers to pull out hundreds of billions of francs during the crisis. UBS's chief executive, Oswald Grübel, said: "I am satisfied with our result, considering market activity during the first quarter, and I am particularly pleased by the increase in net new money, confirming the return of client trust and confidence."

The bank reported pre-tax profits of SFr2.24bn for the first three months of the year, up from SFr1.21bn in the final quarter of last year but down 20 per cent on the same period a year earlier.

Profit at the investment bank rose to SFr835m from SFR100m in the previous quarter but was 30 per cent down on a year earlier as higher income from advice was outweighed by falling revenue from capital markets and risk management.

UBS said the disaster in Japan, unrest in the Middle East and North Africa and the rumbling eurozone debt crisis had muted client activity in the traditionally strong first quarter. It expects equities activity at similar levels for the current quarter. JPMorgan analysts said: "Wealth management is turning around very well. The key is now to address the investment bank."

Mr Grübel's plans to turn around the investment bank are under the microscope after the departures of top bankers and his recent admission that he had underestimated the size of the task. Losses on toxic assets at the investment bank nearly caused UBS to collapse during the crisis and forced a bailout by the Swiss government.

Following the rescue, Switzerland plans to make UBS and Credit Suisse hold twice as much capital as the new Basel III bank capital rules will require. In the bank's first-quarter report, Mr Grübel and his chairman, Kaspar Villiger, said: "We remain concerned that the international regulatory environment increasingly lacks consistency."

UBS shares rose 3.9 per cent to SFr17.23 and have gained 12 per cent this year.