UBS has bled client money in the hundreds of billions after the credit crisis, received a Swiss government rescue and grappled with a US tax evasion scandal which has unnerved its clientele. Now it is trying to put the troubled past few years behind it with a global advertising campaign. But customers may still take a lot of convincing.
“I often asked myself why. I had to do it. I owed it to the people who work for the bank; I owed it to the bank that was my hardest competitor… I owed it to myself.”
These are not the fighting words of Muhammad Ali or Sir Edmund Hillary (both of whose personas are invoked in UBS’s latest PR push), but those of Oswald Gruebel, UBS’s group chief executive and former head of rival Credit Suisse.
Gruebel is battling with difficulties at the Swiss wealth manager: from US government regulatory demands to shoring up flagging staff morale with generous pay concessions. PBI asks if smooth words can do much to help stem the outflow of client assets and – importantly – win back new clients.
“You and us” quietly dropped
In its new, $60m public relations offensive, UBS has chosen a new tagline, “We will not rest”, after quietly dropping its previous branding message, “You and us” a year ago.
The campaign, featuring high-profile personalities like former astronaut Neil Armstrong, architect Le Corbusier, Muhammad Ali and Sir Edmund Hillary is aimed at regaining client trust at a time when investors are still removing money from UBS. This is in addition to outflows which have totalled a net CHF200bn ($199bn) in the past two years.
In the image makeover, which is planned for television, internet and print globally, UBS said it selected different great achievements by people that “became famous by not resting.”
It added in a statement: “The core of UBS’s identity is the focus on long-term relationships. The slogan ‘We will not rest’ expresses the attitude that is required to achieve this.”
F1 sponsorship and Hyposwiss parody
UBS has also agreed a global sponsorship deal with Formula 1, which is expected to give the bank a presence in those markets where it hopes to grow, like Asia, the Middle East and Latin America.
The PR campaign has been poorly received in some quarters.
“It’s cold and corporate,” one financial branding specialist said of the new slogan. “Just imagine the client reaction if the phones don’t get answered or if there is a [problem] with an account. [This slogan] just won’t ring true.”
A small rival, Hyposwiss Private Bank, also took a potshot at UBS, running full-page ads in major Swiss newspapers.
“It will never be about you and us. It will always be about your money,” Hyposwiss said, in a parody of the previous UBS slogan.
The campaign has a tough job restoring client confidence. A multi-billion dollar Swiss government rescue package in October 2008 prompted account holders to switch to other banks en masse.
A US government campaign against UBS and Swiss banking secrecy also led to a haemorrhage from its private banking operations.
The repeated crises at UBS have deeply undermined the bank, which has also had to write off more than $50bn from the financial panic to the point where it has lost its crown as the unchallenged global wealth manager for decades.
Latest data compiled by PBI shows that UBS has slipped back to third place in the global league table for private banking assets under management (AuM), behind Bank of America/Merrill Lynch and Morgan Stanley Smith Barney (MSSB). UBS reported a healthy profit of CHF2bn in the second quarter, but clients still took out CHF5bn from the wealth and asset management units.
US regulators ease off pressure
What may help UBS more than optimistic words is the decision by the US Internal Revenue Service (IRS) to drop a damaging civil lawsuit against the bank. This followed the Swiss government’s declaration it was on track to hand over details on thousands of American clients suspected of using their accounts to evade taxes.
Announcing its decision, the IRS said it had received details on 2,000 clients so far and expected to receive information on the remaining 2,450 by this autumn.
The statement by the IRS should put to rest a damaging affair for UBS and for Switzerland over offshore private banking services that enabled wealthy Americans to evade taxes – a case which has led many clients to play safe by switching their money elsewhere.
Before the latest agreement, the IRS had threatened to revive its legal challenge to UBS through a broad request for client names known as a John Doe summons that would have sought up to 52,000 client names.
The battle with the US tax authorities also cost UBS a $780m fine, under a deferred prosecution agreement over claims that American clients were assisted in evading taxes.
Raising bonuses to maintain morale
The bank is also spending more time internally trying to boost the morale of dispirited private bankers, many of whom have defected to other firms in the past two years. One device being used is to increase compensation, UBS insiders say.
It has raised the maximum bonus limit for its private bankers in Hong Kong and Singapore, in the key high-growth Asia-Pacific region, to CHF200,000. Bankers who bring in at least CHF10m of net new money in 2010 will get a minimum 0.1% of the amount they bring in, and those who gather at least CHF50m a year will get 0.05% of what they generate.
UBS is not out of the woods but the dark days of 2008 and 2009 are clearly behind it. Talk that UBS may have to be broken up, that it would have to pull out of the US because of the tax evasion scandal and that Credit Suisse would be called into rescue its rival, are scare stories of the past.
But as Gruebel admits, UBS still have “a lot of catching up to do.”