Just seen this on the BBC website

http://news.bbc.co.uk/2/hi/business/8505424.stm

Lets hope it keeps going well

No it won't go well. Here's why ....


The UBS Wealth Management business will continue to bleed clients and advisors, and the trickle will soon turn into a torrent... their brand has been irrepairably damaged, and its too late to even sell the business.

UBS will end up being sold off to CS or to a foreign bank.

I don't think that will happen.
Atleast from what I have read in editorials, swiss people are really against creating such a huge monopoly.

Headlines sells newspapers, not facts! That's why in the investment game it's a good idea to learn to think for yourself, so here are a few numbers:

- Tier 1 ratio up from 11% to 15.4% (CS at about 16% I think)
- FINMA leverage ratio up to 3.9% from 2.5%
- Risk weighted assets down by 32%
- Assets under management starting to be come stable at around 2.2 trillion
- Operating costs cut by about 1.2b per quarter

while there once again was a net out flow of new money, it is actually a very small figure when viewed in the light of total assets under management. Furthermore a good chunk of the outflow relates to advisors who where terminated in previous quarters and the Italian tax situation.... On top of that the bonus pool has risen while the number of advisors is down, which means more money for the boys, so fewer exits next time......

I'm going to be watching this very carefully of the next few months as I've got this crazy notion that it might just be time to start buying up cheap bank shares....

Now, what facts did you base your statement on???

Jim

simple. banks have one asset that overrides all others.
(hint ...no, its not the one you calculate ratios with.)

It's TRUST. and UBS lost that a couple years ago...

There isn't one good reason for Wealth Mgmt clients to stay with them. Why would you stay with a bunch of buffoons who could not manage their own house? Especially when about three dozen guys down the street offer exactly the same service???

You can be sure that in a couple years' time there will be another bubble, and your bonus-chasing bankers will take your children's trust fund to the casino again - just like they did the last time... better go with a Julius Baer or a Pictet. They have no investment banking business - in other words, they aren't allowed into Las Vegas.

Swiss people were also against the creation of UBS.

And when the other option is to let a Wall St firm buy it up, I believe the Swiss will really like the CS option...

It's true - reputation is bank's most important asset. They tend not to last when confidence in them goes down the pan. But UBS hasn't lost all the trust of all of it's clients by any means. There isn't, nor has there been, a run on the bank. It's a very serious problem for them for sure, (they admit it themselves), but it's not life threatening yet.

Interesting that withdrawals from Swiss clients in the quarter was negligible, so it seems, for now at least, this is cross border issue. But therein lies the challenge. Returning to profitability and stronger financial health is a major step towards rebuilding client confidence but it won't be enough to reverse the tide. Uncertainty over banking secrecy, tax disputes with the US, italy, Germany et al will continue to haunt them until they're put to bed. But resolving these are not something UBS has control over. And there are signs that these are beginning to affect the wider Swiss Private banking industry as well.

Where UBS management does have control, they're doing all the right things. In fact they acted quickly for the get go when the crisis broke - raising capital, offloading toxic risk positions etc. My read is that trust in UBS management is beginning to recover - that's a critical development for them.

For the rest, there's still a long haul ahead to stop international client outflows. I don't think anyone, least of all UBS's management, think otherwise.

they only made a profit due to a another huge tax rebate, so not quite out of the woods yet

No, it wasn't only due to the rebate. They made a profit of CHF 1.2 bn. The tax credit was CHF 480 million. The market was expecting a profit of CHF 320 million so they still beat expectations. Doesn't warrant a champagne celebration but let's be accurate

And when I say UBS management is doing the right thing here's one example. Bonus clawbacks for posting overall loss in 2009:

http://www.businessweek.com/news/201...2009-loss.html

Trust is important, but in reality the major part of the trust is between the advisor and his/her clients - that's why they are head hunted in the first place - the client portfolio they can potentially bring with them when they move.

Given as you say that that UBS's reputation was hit a few years ago, then it is also reasonable to assume that most of the "switcher" clients are already gone.

That's why things like the assets under management starting to stabilize, the bonus pool being raised and the risk ratios starting to turn all signs to watch.

All I heard from you is opinions and most of them are just a rehash of the old stories and the public soon tire of them and then start to forget and eventually return...

Good luck with that,

Jim

No true, it accounted for 480m of the figure, the main thing was that cut in their cost base - around 1.2b in the quarter, holding that level for 2010 will reduce their cost base by about 5b which will give them some breathing space, even allowing for a further net outflow....

Jim

if Switzerland doesn't settle the tax issue with the US by August then it's game over for UBS in the USA. and maybe not to far from that the rest of UBS.

WMA accounted for 1.3b in income, but only 178m in profits, while WM&SB contributed 2.8 at the income level, but a whopping 1.1b in profits! => not everything revolves around the USA....

It is much harder to determine the impact on areas such as Asset Management and Investment Banking....

Jim

Just the important things. UBS and other Swiss Banks for that matter will focus their efforts on dodgy money from Russia and Asia. Swiss bank secrecy is in effect dead. RIP

Swiss bank managers are well aware that bank secrecy is death and the are adapting accordingly, that is why the are advising clients to seek tax advice, etc.... They are not stupid, they will not just continue to play the same old game if the rules have changed...

On the other hand in both the last two Italian amnesties the Swiss banks retained a high level of the "black" cash. According to the UBS report they retained 63% this time around. It will be interesting to see what CS and the others reports over the coming weeks.

Jim

Fatalism......a belief that an outcome is inevitable, that nothing can be done to change events. It's a quality often found in prophets! Luckily UBS's management haven't succumbed.