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Kurer NewsUBS chairman Marcel Ospel goes as US sub-prime losses hit $37bn$UBS’s 9,000 staff in London are braced for more job cuts after the Swiss bank disclosed big new losses from US sub-prime mortgages and structured credit, making it the biggest credit crunch victim.<br/> <br/> Marcel Ospel, UBS’s chairman, once fêted as the most brilliant banker in Europe, said that he was quitting as he revealed that losses had more than doubled to $37 billion ($£18.6 billion). This is equivalent to three times the annual wages bill of UBS’s 80,000 staff worldwide and much larger than the next most exposed banks so far, Merrill Lynch, with $24 billion, and Citigroup, with $18 billion.<br/> <br/> UBS has been forced into a second emergency capital-raising to shore up its balance sheet, announcing a fully underwritten SwFr15 billion ($£7.5 billion) rights issue. Four months ago it raised SwFr13 billion from the Government Investment Corporation of Singapore and a Middle East investor.<br/> <br/> Shares on both sides of the Atlantic soared as investors welcomed the UBS move to address its sub-prime issues, and Lehman Brothers successfully raising $4 billion cash. The FTSE 100 closed up nearly 3 per cent at 5,852.6, while the Dow soared 391.5 points to close at 12,654.4.<br/> <br/> Marcel Rohner, UBS$’s chief executive, said job cuts in investment banking were planned and the extent of the cuts and other measures would be announced in the next few weeks. The investment banking division, which accounts for most London jobs, would be repositioned “according to its strengths”. He declined to comment on suggestions that the job cuts would be deeper than the 1,500 announced last October. He said: “Clearly the industry is in a very difficult environment and we have to review the capacity with which we operate in this environment.”<br/> <br/> Jerker Johansson, the newly appointed chief executive of the investment bank, who took up his job on March 17, is understood to be sifting the options. His background is in equities. Peter Kurer, UBS’s in-house general counsel, was named successor to Mr Ospel, who will step down at the annual meeting this month. UBS shares rose more than 12 per cent on hopes that the bank could draw a line under its ill-fated foray into American sub-prime.<br/> <br/> After the fresh sub-prime and structured credit losses of $19 billion for the first quarter, UBS estimated its group first-quarter net loss at SwFr12 billion.<br/> <br/> The new rights issue represents a big dilution of existing shareholders. UBS plans to boost its share capital from the present SwFr207 million by up to SwFr125 million, an increase of up to 60 per cent. Details on price have yet to be decided.<br/> <br/> In the wake of UBS$’s announcement, Gordon Brown called for better daily cooperation between the world’s financial regulators and better disclosure from banks to give early warning of market turbulence. Mr Brown said that he will use talks with international leaders before next week’s G7 meeting to call on financial institutions to make prompt and full disclosure of losses. Possible remedies to deal with the crisis include a temporary suspension of capital requirements, taxpayer-funded recapitalis-ation of banks and public purchase of mortgage-backed securities.Read Full Article Did UBS suffer from taking risks or being too conservative?Poor UBS just couldn’t get it right. When the head of its US investment bank quit last year, he complained that it was just too Swiss and not prepared to take the risks necessary to play in the Wall Street major league.<br/> <br/> A mere 12 months later, UBS has chalked up total losses of $37 billion ($£18.6 billion) on its US mortgage-related holdings, making it by far the biggest loser in the sub-prime meltdown.<br/> <br/> The fact that UBS, of all banks, should be claiming that distinction still beggars belief. Senior executives always emphasised that UBS could not afford to take as much risk as the likes of Goldman Sachs because doing so would scare nervous clients in its huge wealth-management business in Switzerland.<br/> <br/> Yet UBS has fallen into every hole it could find. Not only has it lost a fortune taking bets on US mortgages (along with Morgan Stanley), it has also suffered huge writedowns in its business which repackages mortgage securities for sale to clients (like Citigroup and Merrill Lynch).<br/> <br/> In the circumstances, even a great survivor like Marcel Ospel could not hold on. His departure is well overdue. Whether Peter Kurer is the right person to replace him as chairman is another matter. The last head of a financial giant to hand over the reins to the in-house lawyer was Sandy Weill at Citigroup. And look how well that went.<br/> <br/> But investors welcomed Mr Ospel’s exit and the stock jumped 12 per cent as the proposed capital-raising reduced the risk that UBS could fail. With Lehman Brothers raising $4 billion yesterday and interbank lending rates falling, investors once again dared to believe that the worst of the credit crunch may be over.<br/> <br/> Even if it is, however, there is a lot more pain to come in the City. Mr Ospel$’s departure will only increase speculation about the future of UBS’s investment bank and its nearly 9,000 employees in London.<br/> <br/> Marcel Rohner, the chief executive, comes from the wealth-management side and failed during yesterday’s call with analysts to rule out a disposal of the investment bank. Executives insist that there are benefits from keeping the investment bank with the rest of the group. But there are also clearly disadvantages.<br/> <br/> UBS confirmed that those nervous clients in Switzerland have been scared enough by its problems to withdraw some of their funds.<br/> <br/> There are certainly senior figures on the wealth-management side who believe that the group should be split up. Wall Street rivals say that UBS was touting its PaineWebber arm for sale in the US at the end of last year without success. There is no doubt that the stock would soar if UBS could rid itself of its investment banking arm. By hiving off the toxic securities into a separate vehicle, UBS would be able to offer a clean investment bank to potential purchasers.<br/> <br/> The snag is that such purchasers are thin on the ground these days. With the Wall Street banking model facing serious questions, it is hard to believe that the likes of Lehman would be interested. It is now more probable that some of the Wall Street banks will seek a comfortable future in the arms of the big commercial banks, such as Bank of America.<br/> <br/> As for HSBC, it is unlikely to have the stomach for a big deal at the moment. Nor would anyone move until it becomes clearer how much more capital regulators will force investment banks to hold.<br/> <br/> One thing is certain - if the investment bank remains a part of UBS, it will be a smaller part.<br/> <br/> All the signs are that the job cuts due to be unveiled in the next few weeks will be deep. And it will not be the last such announcement that the City will face this year.Read Full Article External News for: kurerSwiss firms in RP asked to help in aid operations - ABS CBN NewsSwiss firms in RP asked to help in aid operationsABS CBN NewsLazaro along with Martin Kurer, SACC's Philippine Chapter Chairman, had established a SACC “Taskforce Asia” (www.taskforceasia.ch) to raise funds for the ...Swiss firms in RP asked to help in aid operations - ABS CBN NewsSwiss firms in RP asked to help in aid operationsABS CBN NewsLazaro along with Martin Kurer, SACC's Philippine Chapter Chairman, had established a SACC “Taskforce Asia” (www.taskforceasia.ch) to raise funds for the ...Flood-hit pour into Bangalore - Mid-DayMid-DayFlood-hit pour into BangaloreMid-DayAs Tavanappa Kurer, who has come to the city from Sindagi in Gulbarga put it, "We aren't here to earn more money and live in luxury. ...and more »Swiss firms in RP asked to help in aid operations - ABS CBN NewsSwiss firms in RP asked to help in aid operationsABS CBN NewsLazaro along with Martin Kurer, SACC's Philippine Chapter Chairman, had established a SACC “Taskforce Asia” (www.taskforceasia.ch) to raise funds for the ...Flood-hit pour into Bangalore - Mid-DayMid-DayFlood-hit pour into BangaloreMid-DayAs Tavanappa Kurer, who has come to the city from Sindagi in Gulbarga put it, "We aren't here to earn more money and live in luxury. ...and more »TIMELINE-Robert McCann to head UBS U.S. wealth unit - ReutersTIMELINE-Robert McCann to head UBS U.S. wealth unitReutersMarch 4 -- Chairman Peter Kurer steps down, replaced by Kaspar Villiger, a former Swiss finance minister. March 13 -- Switzerland agrees to make concessions ...and more » |
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