Oct 2, 2007
UBS sacks top execs, will write down $5b in losses
World’s No. 1 wealth manager now one of credit crisis’ biggest casualties
ZURICH – UBS has unveiled four billion Swiss francs (S$5.09 billion) in losses, swept out senior managers and slashed jobs in one of the biggest casualties yet worldwide from the credit crunch.
The world’s largest wealth manager said yesterday it would write down four billion francs in losses in its fixed-income portfolio and elsewhere, resulting in a third-quarter loss of 600 million francs to 800 million francs, its first quarterly loss in nine years.
The bank said the volatility that had led to the shock write-down was not yet over.
‘The critical time will be over the next six months,’ said chief executive (CEO) Marcel Rohner in a conference call with journalists.
Turning to positions that the group was forced to write down, he said: ‘We feel comfortable in these positions at these levels. There will be some volatility, but this can be managed and traded.’
UBS also said it would shed 1,500 jobs in its investment bank.
Investment bank head Huw Jenkins, who drove a rapid expansion in UBS’ bid to join the top five investment banking ranks worldwide, will leave, along with group chief financial officer Clive Standish.
Mr Rohner – who was named CEO in July after the shock exit of Mr Peter Wuffli due to hedge fund losses – will assume control of the investment bank, and risk management expert Marco Suter will become chief financial officer.
Meanwhile, a UBS spokesman told The Straits Times that the bank’s wealth management business in the Asia-Pacific has doubled in the last two years and that UBS was the top-earning investment bank for the region in the period from January to last month, based on Dealogic’s latest rankings.
‘The Asia-Pacific, including Singapore, has performed extremely well notwithstanding a disappointing but isolated result, primarily from the US fixed-income business,’ the spokesman said.
When The Straits Times queried whether Singapore will be facing any staff retrenchments, the UBS spokesman said: ‘We will continue to invest in the growth areas of our business and create jobs where we see business potential.
‘At the same time, we are also striving to improve our cost/income ratio by increasing our efficiency levels and following a rigorous cost management regime throughout the whole bank.’
UBS’ losses would appear to exceed those reported so far by other investment banks.
The fallout from the sub-prime crisis has varied in the United States, with Goldman Sachs reporting a near-80 per cent jump in quarterly profit last month and rival Bear Stearns suffering a 61 per cent drop.
The potential losses come at a time when critics are questioning UBS’ dual strategy of investment banking and wealth management.
The bank earlier this year replaced Mr Wuffli, saying it was dissatisfied with his handling of its in-house hedge fund, Dillon
Read Capital Management.
Mr Wuffli had led the bank on a steep growth path, expanding from its traditional base in private banking and rapidly building up its business in the US.
A meltdown in the US sub-prime mortgage market, sparked by growing defaults on riskier loans, has created a squeeze in credit markets around the world.
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