UBS cuts investment banking business

by Gill Montia

Story link: UBS cuts investment banking business

UBS, the Swiss investment bank, is undertaking a radical review following losses totalling around $37.4 billion so far, in connection with the US sub-prime mortgage crisis.

Chief executive, Marcel Rohner, has told a meeting of investors that the group’s investment banking business will be cut back and no longer subsidised by its wealth management activities. Mr Rohner admitted that the investment bank’s risk management had been poor.

The meeting elected Peter Kurer as chairman, replacing Marcel Ospel, who resigned on 1st April after UBS wrote down £9.6 billion in sub-prime related loses in the first three months of this year.

A £7.45 billion rights issue was also approved.

Meanwhile, shareholder activist and former chairman of UBS, Luqman Arnold, is pushing for management changes.

He is known to be opposed to the internal appointment of Peter Kurer and believes that the bank should restore its capital position by selling assets.

Up to 4,000 jobs losses are expected to be announced in the weeks ahead, around 900 of which will be among London-based staff.