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UBS in revamp as losses rack up | |
(10 minutes later) | |
UBS has said it will reorganise itself into three units, after announcing another set of sub-prime losses. | |
The Swiss banking giant said the three units would be global wealth management and business banking, global asset management and the investment bank. | |
The news came as UBS reported a loss of 358m Swiss francs ($329m; £173m) for the April to June period, despite hopes it might break even in the quarter. | The news came as UBS reported a loss of 358m Swiss francs ($329m; £173m) for the April to June period, despite hopes it might break even in the quarter. |
The bank's sub-prime debt write-downs in the quarter totalled $5.1bn. | The bank's sub-prime debt write-downs in the quarter totalled $5.1bn. |
The second quarter loss was still much smaller than the 11.54bn Swiss francs it lost in the first quarter of the year. | |
But UBS said that it did not expect to see any improvement in the adverse economic and financial market trends that affected the quarterly results. | |
"The positive sentiment seen at the end of first quarter 2008 that the credit crisis may be easing was short-lived, as trading conditions deteriorated significantly in the second half of May," the bank said. | |
'More effective' | |
UBS had been under pressure from one of its investors, Olivant, to separate the investment bank from the wealth-management division. | UBS had been under pressure from one of its investors, Olivant, to separate the investment bank from the wealth-management division. |
The bank said splitting itself into three autonomous units would make it, "more effective and agile in managing trends in the financial industry". | |
The UBS brand will continue to be used by all its divisions. Bonuses in each unit will be linked to the performance of that unit instead of the whole group. | |
UBS chairman Peter Kurer said the decision came after a review had found several weaknesses in its "one firm" business model. | UBS chairman Peter Kurer said the decision came after a review had found several weaknesses in its "one firm" business model. |
"Some of these weaknesses, such as the blurring of the true risk-reward-profile of individual businesses, are the source of substantial risk, as we have seen in the past few months," he said. | "Some of these weaknesses, such as the blurring of the true risk-reward-profile of individual businesses, are the source of substantial risk, as we have seen in the past few months," he said. |
Last month, UBS said a 3bn Swiss franc tax credit "in connection with the losses to date" would offset further losses from its investment banking business in the second quarter. | Last month, UBS said a 3bn Swiss franc tax credit "in connection with the losses to date" would offset further losses from its investment banking business in the second quarter. |
As a result it predicted that it would break even or at worst make a small loss in the quarter. | As a result it predicted that it would break even or at worst make a small loss in the quarter. |