UBS Issues Profits Warning, Shakes Up Senior Management

Stephen Harris

1 October 2007

UBS has issued a dramatic profits warning and re-organised senior management after suffering huge losses in its investment banking arm. Staff numbers at the investment banking side of the global banking will fall by about 1,500 by the end of this year. According to a statement issued today, the Zurich-based group is likely to record an overall group pre-tax loss of between SFr600 million ($514.4 million) and SFr800 million ($684.3 million) for third quarter, ended 30 September. Pre-tax profits for the first nine months of 2007 will be in the order of SFr10 billion says the bank. The warning follows a write down of positions in fixed income, rates and currencies mainly related to deteriorating conditions in the US sub prime residential mortgage market. The bank's wealth and asset management have been unaffected by the crisis, and are performing very well, with all geographical regions continuing to attract net new money, says UBS. The management shake-up is spearheaded by Marcel Rohner, group chief executive officer, taking over the reigns at the Investment Bank as chairman and chief executive, replacing Huw Jenkins. Clive Standish, group chief financial officer is to retire and will be replaced by Marco Suter, executive vice chairman. Walter Stuerzinger, group chief risk officer is to become chief operating officer, to be replaced by Joseph Scoby, global head of Alternative & Quantitative Investments. Robert Wolf, chief operating officer of the Investment Bank has been appointed president of that division. UBS’ Money Markets, Currencies and Commodities business is to be integrated into Fixed Income under the re-organisation. Following these actions, UBS says it is in a strong position to continue to grow its client businesses. In a statement on the changes, Mr Rohner said: “I am confident that, with these changes and by properly absorbing the lessons of this quarter, we will become a stronger bank. We have a strong balance sheet, a strong franchise, and leading positions in all businesses in all regions. We have thousands of talented people throughout the organisation who, by working together, will deliver further value to our clients and additional growth to our shareholders.”