Capital Wealth Management
Capital Wealth Management
UBS AG (NYSE: UBS; SWX: UBSN; TYO: 8657) is a diversified global financial services company, with its main headquarters in Basel and Zürich, Switzerland. It is the world's second largest manager of private wealth assets, and is also the second-largest bank in Europe, by both market capitalisation and profitability. UBS has a major presence in the United States, with its American headquarters located in New York City (Investment banking); Weehawken, New Jersey (Private Wealth Management); and Stamford, Connecticut (Capital markets). UBS's retail offices are located throughout the U.S., and in over 50 other countries. UBS is an abbreviation, which originated from a predecessor firm, for the Union Bank of Switzerland; however, UBS ceased to be considered a representational abbreviation after its 1998 merger with Swiss Bank Corporation.
UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 38% of its employees working in the Americas, 34% in Switzerland, 15% in the rest of Europe and 13% in Asia Pacific. UBS's global business groups are wealth management, investment banking, and asset management. Additionally, UBS is the leading provider of retail banking and commercial banking services in Switzerland, as of 2009. Overall invested assets are 3.265 trillion Swiss francs (CHF), shareholders' equity is 47.850 billion CHF and market capitalization is 151.203 billion CHF by the end of 2Q 2007.
In 2007, after incurring huge losses, UBS was forced to turn to the Government of Singapore for fresh funding. Since then, the largest shareholder of UBS is Government of Singapore Investment Corporation. In November 2008, following further dramatic losses, UBS managers pledged to return bonuses. UBS shareholders voted to accept financial aid from the Swiss government, to restore the shaken trust in UBS.
In some ways, UBS has evolved on a similar path to its cross-town rival Credit Suisse. Both are Swiss commercial and retail banks which bought major U.S. investment banks and both are currently being investigated by U.S. authorities for allegedly helping 17,000 American citizens to evade taxes. In an unprecedented move on 18 February 2009, UBS, based on an order by the Swiss Financial Market Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, about 250 American clients and to pay US$780 million in fines and restitution.
UBS issued on Tuesday, January 13, 2010, a new code of conduct and business ethics which all employees are asked to sign. The code addresses issues such as financial crime, competition, confidentiality, as well as human rights and environmental issues. The eight-page code also lays out potential sanctions against employees who violate it, including warnings, demotions or dismissal. According to Kaspar Villiger, Chairman of the Board and Oswald J. Grübel, Group CEO, the code is "an integral part of changing the way UBS conducts business".
History
UBS was the result of the merger of the Union Bank of Switzerland and the Swiss Bank Corporation (SBC) in June 1998. Although the merged company's new name was originally supposed to be the "United Bank of Switzerland," officials opted to call it simply "UBS" because of a name clash with United Bank Switzerland - a part of the United Bank Limited's Swiss subsidiary. UBS is no longer an acronym but is the company's brand, like 3M. Its logo of three keys, carried over from SBC, stands for confidence, security, and discretion.
Prior to the merger, SBC had built a global investment banking business through its acquisitions of Dillon Read in New York and S.G. Warburg in London. The first chairman of the merged bank had to step down in October 1998 due to the Long-Term Capital Management crisis, which affected the Union Bank of Switzerland. In 2000, UBS acquired PaineWebber Group Inc. to become the world's largest wealth management firm for private clients. Invested assets in all wealth management businesses, including the U.S., total CHF 3.265 trillion.
On 9 June 2003, all UBS business groups rebranded under the UBS name as the company began operating as one large firm. UBS Paine Webber, UBS Warburg, UBS Asset Management, and others became simply "UBS". As a result of the rebranding, UBS took a $1B writedown for the loss of goodwill associated with the retirement of the Paine Webber brand.
Swiss bank UBS AG reported on 1 April 2008 that it expected to post net losses of 12 billion Swiss francs (US$12.1 billion) for the first quarter of 2008 and would seek 15 billion Swiss francs (US$15.1 billion) in new capital. UBS, hard hit by the U.S. Subprime mortgage crisis, also said it sees losses and writedowns of approximately US$19 billion on U.S. real estate and related credit positions. In April 2008 UBS's long term credit ratings were cut to AA- by Fitch Ratings and Standard & Poor's, and Aa1 by Moody's.
On 16 October 2008, UBS announced they had CHF 6 billion of new capital through mandatory convertible notes, fully placed with Swiss Confederation. The SNB (Swiss National Bank) and UBS made an agreement to transfer approximately USD 60 billion of currently illiquid securities and various assets from UBS to a separate fund entity.
On 4 November UBS announced that their third quarter Group net profit was in line with their 16 October pre announcement, with net profit attributable to UBS shareholders standing at CHF 296 million.
This quarter was affected by a further CHF 4.8 billon of write-downs and losses on risk positions, gain on own credit of CHF 2.2m and a tax credit of over CHF 900m.
UBS announced on 12 November 2008 that from 2009 no more than one-third of any cash bonus would be paid out in the year it is earned with the rest held in reserve. Share incentives would also vest after three years, and top executives would have to hold 75% of any vested shares, with share bonus accounts subject to “malus” charges.
It was also confirmed UBS chairman Peter Kurer would no longer have any extra variable compensation – just a cash salary and a fixed allotment of shares, which cannot be sold for four years. This aligned the chairman’s rewards with group performance while minimising risk. UBS also said that Kurer hoped that others would follow his lead. It was possible that regulators and influential groups such as the Financial Stability Forum would help his cause.
In November 2008, UBS put $6 billion of equity into the new “bad bank” entity, keeping only an option to benefit if the value of its assets were to recover. Heralded as a “neat” package by the NY Times, the UBS structure guaranteed clarity for UBS investors by making an outright sale.
On Friday, 30 January 2009, SNB Chairman Jean-Pierre Roth, the head of the Swiss National Bank, was quoted on Reuters as saying that UBS and Credit Suisse are the two best capitalised banks in the world.
On Monday, 9 February 2009, UBS announced that it lost nearly 20 billion Swiss francs (US$17.2 billion) in 2008, the biggest single-year loss in the history of Switzerland.
On Tuesday, 10 February 2009, UBS confirmed the Board of Directors and the Group Executive Board's commitment to each of the UBS business divisions and strategy. Despite difficult market conditions, it was stated that UBS has made substantial progress in adjusting its operations and has prepared itself for the new market environment, with a "substantial reduction" in risk positions during the fourth quarter.
UBS is resolving investigations relating to its US cross-border business by entering into a deferred prosecution agreement with the US Department of Justice and a Consent Order with the US Securities and Exchange Commission. Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business. The remainder represents United States taxes that UBS failed to withhold on the accounts. The figures include interest, penalties and restitution for unpaid taxes. As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.
On March 11, 2009 UBS AG posted a revised FY 2008 reported 20.9 billion CHF ($18 billion) loss.It was reported UBS was “extremely cautious” about the outlook for 2009.
At the Annual General Meeting on April 15 2009, UBS announced it was planning to cut 8,700 jobs on its return to profitability. Due to the global financial crisis, UBS has had to make about $50bn in write-downs and announce 11,000 job cuts since 2007.
On April 21, UBS announced that it has agreed to sell its Brazilian financial services business, UBS Pactual, for approximately USD 2.5 billion to BTG Investments. The sale of the Brazilian business is in line with UBS’s other measures aiming to reduce its risk profile and to become more profitable.
On Monday April 27, the head of the investment bank division Jerker Johansson resigned with immediate effect. He was replaced by Alexander Wilmot-Sitwell and Carsten Kengeter as Co-CEOs of the investment bank branch.
On May 1 200
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