15 October 2008

UBS Über Alles

Lose so much in your own trading book that people become afraid and seek your advice for their private wealth management. Nice corporate strategy.

Hubris? Or would it be just a case of "prétention démesurée?"

UBS says crisis vindicates own bank model
Wed Oct 15, 2008 4:33pm EDT

GENEVA (Reuters) - Switzerland's UBS the world's largest wealth manager, said its advice-driven, global banking business model will be a winner as others failed or were rescued by governments during the global financial turmoil.

UBS was hit early on in the crisis and has announced more write-downs on toxic assets than any other European bank.

"It's never been more obvious to clients that they need advice. This is going to be the proof to our business model," Juergen Zeltner, who heads UBS' wealth management operations in North, Central and Eastern Europe, told the Reuters Wealth Management Summit.
UBS has not given up on investment banking despite huge losses on the business and instead has divided its operations into three separate divisions -- wealth management, investment banking and asset management -- to boost transparency.

Banks which heavily relied on investment banking revenues, such as Lehman Brothers, have either gone bust or needed rescues via forced mergers or government aid.

"I strongly feel that the transparency that we put in place was well appreciated," Zeltner said.

Still, Zeltner said the damage to UBS' reputation from the huge losses in its investment banking division was obvious and had resulted in client outflows. The bank will report third quarter results on November 4.

"We lost trust. We do know that there was substantial damage and that will take years to rebuild," he said.

UBS recapitalized itself earlier than any other bank, before the deepening of the crisis in September, and is now in a position to exploit opportunities in markets where other players have failed, such as the United States, he said. (You'll have to compete with our 'national champions' who are getting their subordinated distress funding from the US Treasury - Jesse)
"The crisis gives us unique opportunities in the United States," Zeltner said.

"We want to grow and build market share."