Using a weekend of extravagance to reward loyal clients or convert prospects is a business model that served the world’s biggest private banks well. UBS has sponsored Lewis Hamilton’s Mercedes-AMG Formula One team since 2011, a period during which it upped its focus on a wealth-management business that has amassed $2.3 trillion of assets. Credit Suisse sponsors a classic-car rally two weeks before the main event where clients can parade their vintage vehicles.
The short-team impact of the pandemic -- and the accompanying rush of transactions it precipitated -- has so far boosted wealth managers. UBS reported a 40% jump in first-quarter profit, driven by transactions from both investment banking and wealth-management trading activity. Net new money at Credit Suisse’s wealth-management division was able to help offset a decline in assets under management.
Facing months or years of lockdown, top banking executives will soon have to decide how much faith they place in the existing hospitality model. Not everyone believes in webinars just yet.
“I can’t see an ultra-high-net-worth business magnate going onto a webinar,” said Ivor Alex, who runs a financial-recruitment firm with offices in Monaco. “If they hold it next year, I assume the Monaco Grand Prix will be business as usual.”