UBS, Citi and Merrill dominate wealth management

But despite their combined $4.3 trillion of the global market, the industry remains surprisingly fragmented, says Scorpio.
The troika of UBS, Citi and Merrill Lynch are the biggest wealth managers, according to the annual private banking benchmark report from London-based Scorpio Partnership.

This report, which excludes wealth management figures in North America, covers 180 private banking entities managing a total of $10.8 trillion of assets. But while the top three players enjoy a combined market share of 39.3% of surveyed private banks, Scorpio notes that the real universe constitutes at least 400 organisations managing an estimated $51 trillion. Scorpio estimates that the top three in fact account for a combined 11.8% of total market share, and the top 10 make up 19%.

Cath Tillotson, partner at Scorpio, says increasing transparency is beginning to reveal just how fragmented the private banking industry really is. ôPerhaps we should think the unthinkable,ö she says, ôthat the actual size of the private bank market is different to the widely stated size estimates for high-net-worth assets.ö

Whatever the composition, the private banking industry is experiencing strong growth, although not quite as strong as a year ago. The 180 firms surveyed reported a net 14% gain in assets under management in base currency terms; the 2005 gain was 18%. But profitability remains as strong as ever: the growth in new business and rising market valuations has fuelled a median growth of 24% in operating profits across the industry, Scorpio reports.

Sebastian Dovey, managing partner at Scorpio, warns however that this rise masks a real discrepancy in quality: ôThere is a feeling that there is easy money to make at the moment, but our research shows that long-term successes are only built on sensible strategies, successful hires and, most crucially, a constant focus on clients.ö

The biggest surprise in the consultancyÆs annual rankings this year is the inclusion of Pictet in the top 10, which saw its business grow in 2006 by 30.5% in Swiss franc terms û the fastest growing business among the global top 10. Bank of America, which was ranked ninth last year, fell out of the top 10.

UBS remains top dog with $1.6 trillion of assets from its wealth management arm. Citi is second with $1.4 trillion and Merrill third with $1.2 trillion. This is the same order as a year ago.

Thereafter comes a steep drop, with Credit Suisse in fourth place with $642 billion. JPMorgan comes fifth with $465 billion, followed by Morgan Stanley ($450 billion), HSBC ($408 billion), Deutsche Bank ($249 billion), Wachovia ($206 billion) and Pictet ($192 billion).
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