Preparing UBS for the new market environment
UBS announced today structural changes to adjust to new market conditions and the changing environment. UBS created two new business divisions: Wealth Management & Swiss Bank under the leadership of Franco Morra and Juerg Zeltner, and Wealth Management Americas, led by Marten Hoekstra. Each of the three executives is a member of the Group Executive Board. The new structure re-focuses UBS on its Swiss core businesses, on the large scale and strengths of its international wealth management franchise in Switzerland, and on the growth potential of its on-shore business globally. The Investment Bank has made substantive progress in de-risking and de-leveraging its balance sheet, and its overall structure has been greatly simplified. Achievable targets have been set for 2009 for further reducing headcount and for use of balance sheet and overall risk. UBS confirmed the Board of Directors' and the Group Executive Board's commitment to each of UBS's business divisions and strategy. Despite difficult market conditions, UBS has made substantial progress in adjusting its operations and has prepared itself for the new market environment.
The Board of Directors and Group Executive Board of UBS have accelerated the process of focusing the bank on its client businesses to ensure long-term sustainable profitability.
Peter Kurer, Chairman, said: "With our announcements we are emphasizing the importance of our core business in Switzerland, which will be much better represented in our leadership and governance going forward. In addition, we are showing our willingness to further invest in our industry-leading global Wealth Management business. The Board of Directors and the Group Executive Board are also renewing their full commitment to our Investment Bank. Over the last few months its business model has been completely refocused with a view to be managed in line with the requirements of the new banking landscape. Our Global Asset Management division is also well positioned to respond to market developments."
Over the past 18 months UBS has aggressively managed the challenges of the financial crisis. UBS raised capital from private investors and from the Swiss government, reduced its cost basis, continuously reduced its balance sheet and substantially reduced its positions in troubled securities, including through the transaction with the Swiss National Bank (SNB). Furthermore, UBS has strengthened its governance, improved risk controls, streamlined its management structure and introduced an innovative, forward-looking compensation model.
Marcel Rohner, Group CEO, said: "The conditions for the financial industry have changed and will remain different for the foreseeable future. We have adjusted our businesses such that they are best positioned to be profitable and to grow sustainable earnings in a new environment."
Changes in Global Wealth Management and Swiss banking
With immediate effect, UBS will establish two new business divisions: Wealth Management & Swiss Bank, comprising all non-American wealth management businesses as well as the Swiss private and corporate client business, and Wealth Management Americas.
"The formation of the two new divisions will help to re-build our reputation and recognition. Management will focus on their specific strategic challenges which, among others, are changes in client behavior, new market dynamics and a tight regulatory environment," Marcel Rohner commented. "We will broaden the wealth management representation at the Group Executive Board level and, particularly, elevate the profile of the highly profitable and dependable Swiss business," Rohner added.
Wealth Management & Swiss Bank will be led by two new Group Executive Board members, Franco Morra and Juerg Zeltner.
As CEO Switzerland, Franco Morra will head the wealth management business for domestic Swiss wealth management and private clients and will represent UBS to Swiss stakeholders. In his previous roles and senior management positions at UBS, Franco Morra has accumulated a wealth of experience in different and diverse wealth management markets. This background will help him raise UBS's profile as the leading bank for wealth management, retail, corporate and institutional clients in Switzerland.
As CEO Wealth Management Global, Juerg Zeltner will lead all UBS domestic wealth management businesses outside of Switzerland and the Americas. Juerg Zeltner has been with the firm since 1987 in various senior management positions in the Private Banking Division in Switzerland, the US and in Germany. This vast experience - combined with the distinct strengths of the large scale of UBS - will enable him to further develop our world-leading Wealth Management business.
Wealth Management Americas under the leadership of Marten Hoekstra will continue to focus on gaining scale and market share in the domestic US wealth management market as well as further developing the Canadian and Latin American markets.
The Investment Bank will remain a core business of UBS. It has been significantly de-risked and de-leveraged, and its overall structure has been greatly simplified. Further targets have been set for 2009 for reducing its use of balance sheet and overall risk. The Investment Bank will also further reduce its headcount to 15,000 by the end of the year (this does not include staff who will be managing positions from businesses that UBS is exiting).
UBS has already implemented far-reaching changes in its Fixed Income business. The overriding strategy is to simplify the structure, emphasize the client business and reduce risk and balance sheet usage. As a consequence, the Investment Bank has exited Institutional Municipal Securities, Proprietary Trading, Commodities (excluding precious metals, ETD and indices) and Real Estate & Securitization activities as well as exotic Structured Products.
"We are focusing on our three core businesses: our Investment Banking Department and Equities activities, with their very strong global franchises, as well as our client-facing Fixed Income areas, including our world class Foreign Exchange (FX) business," Jerker Johansson, CEO of the Investment Bank, explained. "Our number one priority is to be profitable in 2009. Going forward, our Investment Bank will be client-focused, self-fundable and less complex to manage."
Peter Kurer added, "The Board has now concluded its strategic review and is committed to the refocused Investment Bank as a fundamental part of a strong UBS."
Global Asset Management
UBS Global Asset Management continues to be a key part of UBS's strategy and franchise. The increased autonomy given to UBS's business divisions, including Global Asset Management, gives it greater flexibility to pursue appropriate strategies for the benefit of clients.
UBS has had an encouraging start to the year, and net new money was positive in January in both our wealth management and asset management businesses. However, financial market conditions remain fragile as company and household cash flows continue to deteriorate. On the other hand, governments are taking very substantial measures to ease fiscal and monetary conditions. Our near-term outlook remains cautious, and UBS will continue its program to strengthen its financial position through reductions in risk positions, risk weighted assets, total assets and operating costs. This will allow us to focus management and other resources on securing and building the firm's core client businesses.
CEO Switzerland, Franco Morra
In November 07 he was appointed Head of Wealth Management Western Europe, Mediterranean, Middle East & Africa. In addition, as of September 2008 he was also responsible for the business unit Latin America, Caribbean & Canada. Franco Morra joined UBS in 2005 as Head of Wealth Management Italy and as a member of the Group Managing Board. Before joining UBS, he held various management positions at The Boston Consulting Group Inc. between 1992 and 2005. He holds a PhD in economics from the University of St. Gall (Switzerland). He was born on 31 August 1967. His citizenship is Swiss-Italian.
CEO Wealth Management Global, Juerg Zeltner
In November 07 he was appointed Head of Wealth Management North, East & Central Europe and became a member of the Group Managing Board in the same year. From 2002 to 2005 he was CEO of UBS Deutschland AG, Frankfurt and became CEO of all UBS business in Benelux, Germany and Central Europe in 2007. Prior to that, he held various management positions in the Private Banking Division of UBS. Between 1987 and 1998, Juerg Zeltner was with SBC in various roles within the Private and Corporate Client Division in Bern, New York and Zurich. He graduated from the School of Economics and Business Administration in Bern and completed the Advanced Management Program at Harvard Business School. He was born on 4 May 1967 and is a Swiss citizen.