Local branch of UBS faces overhaul SWISS investment bank UBS is considering its options for its underperforming Australian wealth management division, including a full or partial spin-off, according to people familiar with the deliberations. Talk of proposals has emerged following a UBS management meeting in Sydney last week, Data Room has learned. One would see UBS offload its entire wealth management arm, with Bell Potter Securities a possible landing pad. The second proposal would see the bank keep the top 20 per cent of advisers in the division and spin off the rest to Bell Potter, in which UBS holds a stake of about 16 per cent. When asked about plans for a spin-off, a UBS spokeswoman said: "We have no plans to sell all, or part, of the wealth management business in Australia, we are actually looking to grow the business." Data Room has learned the second proposal resurfaced after being put forward last year by Christine Ong, who was sent to Australia to review the struggling division by UBS's chief of wealth management for the Asia Pacific, Kathryn Shih. Ms Ong was given the title head of business change in Australia and, according to sources, the Australian wealth management arm is being pulled into the orbit of Hong Kong-based Ms Shih at a "rate of knots." The division's numbers compare poorly with Asian operations. The local division of the business is understood to face a calendar year loss of $17 million to $20m, following red ink last year. Revenue for the local wealth management division reportedly came in at about $93 million in 2012 but is expected to be significantly lower this year. In June about 20 per cent of the division's takings walked out the door with a handful of key Melbourne advisers, who left to form upmarket boutique Escala, based in Collins Street. The wealth arm has also taken a hit on ongoing costs associated with its enforceable undertaking with ASIC, entered in March 2011 after the bank failed to send clients documents that highlighted risks and fees associated with investments they entered into between 2006 and March 2010. It is believed the bank might book losses on the back of the ASIC undertaking to support the case for a spinoff. Last year's review of the wealth management division found a small group of advisers wrote the bulk of the wealth management business, while many accounts sat dormant. Sources say about 15 advisers write more than $1m annually, a group who write between $300,000 and $800,000 and "a whole pool" who write less than $250,000. "That pool is what UBS wants to get rid of under a spinoff, about 60 per cent of their advisers are superfluous to their needs, and would not have any impact on the investment banking side of things," one source said. If the wealth management division were to be spun out it would likely be welcomed by UBS's local investment bankers, who refer to the division as "the badlands." Compared to UBS globally, where wealth management delivers about 60 to 65 per cent of revenue, the Australian arm is an anomaly, where the investment bank drives the majority of revenue. Wealth management was no longer an anchor for corporate deals at UBS, one source told Data Room. UBS ECM (equity capital markets) don't rely on wealth management. Good deals aren't shown to them any more. A deal would also probably result in an exodus of UBS advisers, who would prefer to work for a global brand. A spinoff would have the country's wealth management industry frothing at the chance to take any clients that walked following a deal. An alternative proposal would be to hive off the entire wealth management division, potentially into Bell Potter. Sources said that would be a riskier strategy because the "ultra high net worth clients" would be less likely to leave a global brand for a local one. Any spinoff would mean sweeping job cuts from UBS's national workforce.