Switzerland’s largest bank, UBS, is set to open a subsidiary in Russia at the end of 2006. The world’s leader in wealth management, which already has an establishment in Russia, has recently been granted its banking licence. As a result, UBS is now in a position to develop the private banking sector, which was previously off-limits.
Such services are predominantly aimed at wealthy Russians and millionaires who have made their fortune since the fall of the USSR.
CEO, Kurt Schmid and Executive Director, Michael Kuenzi of UBS’ Russian subsidiary, who speak Russian fluently, were interviewed by Business Mir.
Since when has UBS been doing business in Russia? UBS has been present on the Russian market for a decade. In 1996, it opened a representative office in Moscow and subsequently entered in a joint venture with the Russian firm, Brunswick in 1997. In 2004, UBS bought out its partner’s share and in 2005 the company was re-branded UBS.
Why does the Russian market appeal to Switzerland’s largest bank? Tapping the Russian market is an obvious progression for UBS who wishes to benefit from the new opportunities the country has to offer. Indeed, it is a very large market which is growing rapidly. Our present strategy is to establish ourselves on the Chinese, Indian, Russian, Brazilian and Middle Eastern domestic markets. We wish to offer our services domestically on these growing markets.
Is fund management for wealthy Russian UBS’ principle objective? It is true that we will offer our wealth management services on the Russian market from our new offices.
This service becomes interesting once the client is in a position to invest at least 25 0000 dollars.
However, UBS has always offered investment baking for companies and handled investment funds as well.
What clientele are you hoping to attract? We hope to address a varied clientele with our services, be it companies, pension funds, governments or private clients. Along with fund and wealth management, we will also offer fixed- income investment products in Roubles and a foreign exchange service. With these additional services, we aim to supplement and reinforce our existing Russian operations in equity and investment banking.
Do you intend to offer all the standard services of a bank? We envisage offering a collection of services. It has always been primordial for UBS that a client may take care of all his/her bank business at one address. However, we will not engage in retail bank- ing. It is company policy that we solely deal with the day to day running of accounts of small clients in Switzerland and not abroad.
Are you optimistic about UBS’ development in Russia? We want to concentrate on increasing our market share in the sectors where we are already present.
Thanks to the relationships formed with different Russian clients while we were a franchise, we have gained a strong foothold in the market. Indeed, we are wholly convinced that our business will expand at a rapid pace.
Is the Russian market a particularly difficult market to tap? We don’t consider the Russian market any more difficult than that of any other emerging economy.
The fact that we have established ourselves on the domestic market is a clear indication that we are planning to establish ourselves here. We are extremely optimistic about our long-term objectives in this country.
Have you considered the risks involved with setting up in Russia? Russia has a growing economy and we believe that we can use these growth opportunities to our benefit.
Nevertheless, there are inherent risks in a market of such potential.
Have you already been confronted with the problem of corruption? At UBS one of our working mottos has always been “the root to success is to know your client well”.
Indeed, this is the basis of all operations at home and abroad. The bank adheres to a strictly professional code of conduct and, as a result, we expect to avoid any such difficulties.
What competition are you faced with on the Russian market? Our competitors differ according to each business sector, for example we compete with both Russian and international firms at the same time. Russian banking remains dominated by large state-run companies who hold the majority of private funds. In fact, foreign banks hold less than 10% of the market.
Nevertheless, we are of the opinion that the Russian clientele will continue to be increasingly demanding regarding the products and services of their domestic banks. UBS is well capable of meeting the expectations of these clients who want more out of their banks.
Are the larger international banks already present on the Russian market? Many large groups have already been granted their banking licence, but UBS remains the only company which will offer wealth management combined with investment banking.
