• 26 Jul 2011 at 1:13 PM

Half Of UBS Investment Bank Is Supporting Asset Management, Other Half Might Want Consider Their Options Elsewhere

By Matt Levine

Earlier this morning, UBS announced that income fell to 1.02 billion Swiss francs ($1.27 billion) from 2.01 billion francs last year, leaving the door open for analysts to air their grievances about the investment bank and press CEO Oswald Grübel on UBS’s earnings call about the underperforming investment bank and how it will fit with the relatively strong wealth management division in the future.

JPMorgan’s Kian Abouhossein, for example, thinks that UBS’s fixed income business sucks and refused to mince words about it:

If I look over the last 4 quarters, you’re either the worst performer [in FICC] in the industry globally of the top players, or you’re the second worst. Mr. Grübel, when do you say enough is enough of underperformance, and when do you take more drastic action?


Point taken. Grübel responds that UBS is thinking about “what kind of fixed income departments do we need actually for the rest of our operation, because as we said before we do need for our integrated bank a fully functioning investment banking operation.” With the implication that FICC and other investment banking businesses may be scaled back to what is necessary to support the wealth management side, and that if you’re in FICC and not doing that then maybe Stamford is not going to be the place for you, long-term.

Later Grübel was asked to put a number on how much of the investment bank is supporting wealth and asset management and how much is less necessary than necessary. He answered:

The big question is what kind of trading operation of what kind of size would you need to support our wealth management and asset management around the world. And so I think in the end it comes down to, we have 50-75% [of the investment bank] probably would be needed to keep our wealth management going.

It’s sort of an odd definition, though, as he seems to be counting not just flow trading but also capital markets (underwriting) and advisory investment banking as businesses that primarily support wealth management. We’re not sure that corporate clients want to hear that UBS thinks that underwriting their securities deals is primarily a service to its wealth management clients who buy those deals – or that it views M&A advice as just a way to get into that service.

UBS scraps ambitious earnings targets [FT]

UBS earnings webcast

Comments (22)

  1. 1
    Posted by notguest | July 26, 2011 at 5:19 PM

    wait for it…

  2. 2
    Posted by Guess | July 26, 2011 at 5:32 PM

    But I thought they had “re-established credibility and professionalism” by requiring jackets and ties.

  3. 3
    Posted by zaqxswtrewq | July 26, 2011 at 5:35 PM

    Na na na na .. Hey Hey Hey Good Bye …..

  4. 4
    Posted by Anonymous | July 26, 2011 at 5:41 PM

    Now playing in Stamford and Zurich: http://www.youtube.com/watch?v=U7AGbgzfXisn

  5. 5
    Posted by Anonymous | July 26, 2011 at 6:03 PM

    Caption contest:nnOswald Grubel shows employees the door

  6. 6
    Posted by Anonymous | July 26, 2011 at 6:10 PM

    Caption Contest:nnAs a matter of fact I am high, can’t you see this enormous spliff in my hand?

  7. 7
    Posted by Guest | July 26, 2011 at 6:16 PM

    CC:nn”So then why don’t you Beamers Girls quit whining, pool your tips and buy the damn place… “

  8. 8
    Posted by Gusto | July 26, 2011 at 6:18 PM

    ehh so what – 25-50% layoffs?

  9. 9
    Posted by Guest | July 26, 2011 at 6:31 PM

    What is with all these MBA articles?!

  10. 10
    Posted by 2StopShop | July 26, 2011 at 6:49 PM

    I’m tired of waiting — UBS Sucks.

  11. 11
    Posted by Anonymous | July 26, 2011 at 6:55 PM

    *sigh*nu00a0n- GM of Stamford Applebee’s who now regrets paying $1,500 to install a faux-wod-panel sliding partition wall in hopes of caputirng au00a0large share of theu00a0lucrative Christmas private party market.

  12. 12
    Posted by Anonymous | July 26, 2011 at 7:09 PM

    “And this, here, is where Armeeabteilung Steiner will stage the counterattack that will block the enemy advance!”

  13. 13
    Posted by Guest | July 26, 2011 at 7:22 PM

    I’m actually disappointed. Not in UBS, but with JPM expecting so much from UBS. You don’t have to be an AIG quant to know that the first rule of earnings season is to NEVER expect anything from UBS.u00a0

  14. 14
    Posted by Anonymous | July 26, 2011 at 7:24 PM

    I just paid $22.87 for an iPad2-64GB and my girlfriend loves her Panasonic Lumix GF 1 Camera that we got for $38.76 there arriving tomorrow by UPS. I will never pay such expensive retail prices in stores again. Especially when I also sold a 40 inch LED TV to my boss for $675 which only cost me $62.81 to buy. Here is the website we use to get it all from, GrabPenny.com

  15. 15
    Posted by Guy with a sweet 1998 'lude | July 26, 2011 at 7:32 PM

    CC -nn”..and over there is our pre-loved Honda lot.u00a0 Perhaps a bit more inside your price range.”

  16. 16
    Posted by UBS MD | July 26, 2011 at 7:50 PM

    Thanks Selena but do u have anything in say a used Kindle u00a0 or perhaps an oldu00a0 Zenith console TV .. that is allu00a0 a bit pricy for me ….

  17. 17
    Posted by Guest | July 26, 2011 at 7:55 PM

    Getting savings like those sure is a great way to manage wealth.u00a0 Rest assured UBS will be retaining Selena.

  18. 18
    Posted by Anonymous | July 26, 2011 at 8:01 PM

    Hi Selena:nn”Girlfriend” as in you could marry her in NYS or as in BFF?nn-not Curious in NYC but a fan of his work

  19. 19
    Posted by Steve Gobie | July 26, 2011 at 8:19 PM

    Kill yourself and your girlfriend.

  20. 20
    Posted by Guest | July 26, 2011 at 9:38 PM

    CC – nn”Velcome to Sprockets.”

  21. 21
    Posted by Shortubs | July 27, 2011 at 1:00 AM

    get rid of everyone with those ceremonial titles at UBS: MD’s, ED’s D’s.

  22. 22
    Posted by DingALing | July 27, 2011 at 1:26 PM

    A face only a UBS analyst could lovenn-UBS Analayst

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