UBS Wealth Management Americas, an arm of Switzerland's largest bank, has joined the growing list of lenders in the United States gunning for mortgage volume through the wealth management channel.
The bank, which caters to high-net-worth ($1 million to $10 million in assets) and ultra-high-net-worth (over $10 million) clients, sees mortgage lending as a key area for expansion.
"Lending is critical to the future growth of WMA," Bob McCann, the CEO of UBS Americas, said this month at an investor presentation. "In fact, it is one of the single biggest opportunities we have at UBS Americas."
UBS is making this push at a time when jumbo mortgages are one of the few hot spots in residential originations. The nation's top banks are focused on originating jumbo and interest-only mortgages to wealthy borrowers and keeping these loans on their balance sheets. Such loans to high net worth individuals tend to have very low defaults, but competition for those borrowers is intense.
Mortgage balances at UBS Americas mushroomed from $100 million in 2009 to $6.4 billion at the end of 2013.
UBS wants to double its advisor penetration in mortgages, which the firm defines as the percentage of advisors originating more than one mortgage in a 12-month period. That figure is currently 26%, up from 8% in 2009. The firm has far to go in order to catch up to its rivals, according to McCann.
"I believe that number is 60% at our competitors who are more established in the mortgage market. So our goal is to reach a penetration level of 50%," he said.
The push into the U.S. mortgage business is an about-face for UBS, which fled the industry after suffering big losses on residential assets during the financial crisis.
"We literally lost the ability in October 2009 to underwrite a mortgage. We were not underwriting any mortgages. And from mid-March 2010 to today, weve gone from having $100 million to $6.7 billion," said McCann, who has overseen the firm's wealth management business in the Americas since October 2009. The firm has about 7,000 financial advisors.
Andrew Welsch is the associate editor of On Wall Street, a sister publication to American Banker.