By Brenna Hughes Neghaiwi

ZURICH (Reuters) - UBS kept its ranking as the world's biggest private bank last year, a study by wealth management researcher Scorpio Partnership showed on Thursday.

With $1,737.5 billion of assets under management, UBS retained its highly-prized first place in 2015, staying nearly $300 billion ahead Bank of America Merrill Lynch which replaced Morgan Stanley in second place.

UBS, Switzerland's biggest bank, saw a 1 percent fall in managed assets in 2015, while BofA Merrill Lynch's managed assets dropped 2 percent and Morgan Stanley's fell 2.8 percent.

Facing a slowdown in emerging markets, heightened volatility and hesitant clients, assets under management fell 1 percent in the overall industry, the private banking benchmark study showed.

Net new money, a volatile but important indicator of future earnings in wealth management, fell 6.9 percent overall.

For the 25 largest industry players, the drop in assets under management was steeper, even though they were able to increase net new money by a third.

"Ultimately, the market leaders have focused aggressively on improving their cost-effectiveness in their operating models in order to weather the storm as best as possible," Scorpio Managing Partner Sebastian Dovey said.

Switzerland's second biggest bank Credit Suisse fell further behind Morgan Stanley in the ranking with a 7.2 percent fall in its managed assets to $687.3 billion, the benchmark showed.

With less than half of Morgan Stanley's managed assets, Credit Suisse would need to add $750 billion to break into the top three in private banking, an area Chief Executive Tidjane Thiam hopes will its main money maker in the coming years.

Under Thiam, Credit Suisse has shifted resources away from investment banking and into wealth management in an effort to cut costs and boost earnings while taking on less risk.

(Editing by David Clarke)