UBS cements lead as largest private bank, assets near $2 trillion

Scorpio Partnership study finds Morgan Stanley, Credit Suisse and Royal Bank of Canada rounded out top five overall

UBS cemented its lead over US brokerage Bank of America Corp as the world's largest private bank and is within striking distance of managing $2 trillion on behalf of the wealthy, according to a study on Thursday.

The study by London-based wealth management consultant Scorpio Partnership found that Morgan Stanley, Credit Suisse and Royal Bank of Canada rounded out the top five overall.

UBS is nearly two years into a plan to cut back on riskier debt trading activities and put its private banking arm at the heart of its strategy, a move it says will drive returns for shareholders.

Zurich-based UBS displaced Bank of America in the top spot last year in the annual benchmark after the Charlotte, North Carolina-based bank sold its private bank outside the United States to Switzerland's Julius Baer, which shot up to 12th place in this year's ranking as a result of the acquisition.

Private banks worldwide saw nearly double 2012's growth in assets last year, in part due to favourable securities markets, which added value to existing assets, but also by winning fresh funds.

The private banking industry now manages $20.3 trillion in total, up from $18.5 trillion one year ago.

A global tax crackdown and tighter regulation has hit private banking in Switzerland in particular, which is the world's largest offshore cash centre with roughly 2 trillion Swiss francs ($2.23 trillion) in assets.

Spending to bring private banks into line with rules laid out by the Organisation for Economic Cooperation and Development (OECD) governing secrecy and data sharing is also rising.

Cost-to-income ratios crept up to an average 83%, compared to 80% one year ago.

"Overall, key growth indicators are positive but efficiency ratio averages are not yet improving, which is still an alarm bell to consider by many in the corridors of power," Scorpio said.

The study found that American brokerage firms were doubling down at home as opposed to expanding overseas. In the United States, the top five brokers in 2013 were Bofa, Morgan Stanley, JPMorgan Chase & Co., Goldman Sachs and Northern Trust. ($1 = 0.8980 Swiss Francs)