'UBS
AG' (;
SWX:
UBSN; ) is a diversified global financial services company, headquartered in
Basel and
Zürich,
Switzerland. It is the world's largest manager of private wealth assets,, "the world's biggest manager of other people's money"
[ Down the Matterhorn ] and is also the second-largest bank in
Europe, by both market capitalisation and profitability. UBS has a major presence in the U.S., with its American headquarters located in
Manhattan (Investment Banking);
Weehawken, New Jersey (Private Wealth); and
Stamford, Connecticut (Capital Markets). UBS's retail offices are located throughout the United States, and in over 50 other countries. ''UBS'' is an
initialism which originated from a predecessor firm, the
Union Bank of Switzerland, however ''UBS'' ceased to be considered a representational
acronym after its 1998 merger with
Swiss Bank Corporation.
[1]
UBS's global business groups are Private Banking, Investment Banking, and Asset Management. Additionally, UBS is one of the leading providers of retail banking and commercial banking services in Switzerland. Overall invested assets are 3.265 trillion
Swiss francs (CHF), shareholders' equity is 47.850 billion CHF and
market capitalization is 151.203 billion CHF by end of 2Q 2007.
The AG in the company's name means ''
Aktiengesellschaft'', which is the equivalent to a shareholder-based ''
corporation'' in the USA.
In some ways, UBS has evolved on a similar path to its cross-town rival
Credit Suisse. Both are Swiss commercial and retail banks which bought major US investment banks (and in the case of UBS, a leading retail stock broker,
PaineWebber).
History
UBS has its roots as a Swiss Bank, originating in 1747, when its first branch was established in the Swiss region of Valposchiavo. However, the three core components of the company date back to the second half of the nineteenth century.
Union Bank of Switzerland,
Swiss Bank Corporation, and
Paine Webber or their antecedents, were all founded in the 1860s and 1870s.
Modern UBS was formed through a merger of the
Union Bank of Switzerland and the
Swiss Bank Corporation in June 1998. Although the merged company's new name was originally supposed to be the "United Bank of Switzerland," officials opted to call it simply "UBS."
SBC had previously built a global investment banking business through its acquisitions of
Dillon Read in New York and
S.G. Warburg in London. The first chairman of the merged bank had to step down in October 1998 due to the
Long-Term Capital Management crisis, which affected the Union Bank of Switzerland. In 2000, UBS acquired
PaineWebber Group Inc. to become the world's largest wealth management firm for private clients. Invested assets in all wealth management businesses, including the U.S., total CHF 3.265 trillion.
On June 9th, 2003, all UBS business groups rebranded under the UBS name as the company began operating as one large firm. UBS Paine Webber, UBS Warburg, UBS Asset Management, and others became simply "UBS". As a result of the rebranding, UBS took a $1B writedown for the loss of goodwill associated with the retirement of the Paine Webber brand. UBS is no longer an acronym but is the company's brand, like
3M. Its logo of three keys, carried over from SBC, stands for confidence, security, and discretion.
[2]
UBS is present in all major financial centers worldwide, with offices in 50 countries. According to the UBS website, the bank had 81,557 employees on
June 30,
2007. The 2007 Q2 report breaks these Financial Business permanent staff down by region as: 27,315 in Switzerland, 31,933 in the Americas, 13,355 in
Europe, the Middle East and Africa (APAC / not including Switzerland), and 8,954 in Asia and
Australasia (APAC).
Management
Marcel Ospel is the Chairman of the Board of Directors.
The Group Executive Board is the executive body of the company.
[3] Its members are:
★ Executive Vice Chairman:
Marco Suter
★ Group CEO: Marcel Rohner
★ Chairman and CEO Global Wealth Management & Business Banking:
Raoul Weil
★ Chairman and CEO Global Asset Management:
John A. Fraser
★ Chairman and CEO Investment Bank:
Huw Jenkins
★ Group General Counsel:
Peter Kurer
★ Group Chief Financial Officer:
Clive Standish
★ Group Chief Risk Officer:
Walter Stuerzinger
★ Chairman & CEO Americas: Robert Wolf
★ Chairman and CEO Asia Pacific:
Rory Tapner
Businesses
:''See also
Swiss banking and
Zurich''
UBS is organized in four business groups:
Global Wealth Management &
Business Banking,
Investment Bank, Global Asset Management, and Corporate Center.
Dillon Read Capital Management
In June 2006, UBS announced the launch of Dillon Read Capital Management, an alternative investment management business, in an effort to capture new business and retain staff that UBS was losing to other hedge funds
[4]. John Costas, then CEO of UBS Investment Bank, left the position to lead up the new DRCM business. UBS guaranteed a $1B bonus pool over the first three years for the 120 employees to discourage traders from leaving
[5].
On
May 3,
2007, UBS announced the closure of Dillon Read Capital Management due to "operational complexities." DRCM ran up a loss of $124M in the first quarter.
[6].
UBS Polybahn
One of the more unusual businesses operated by UBS AG is the
UBS Polybahn, a
funicular railway in
Zürich,
Switzerland. The group's ownership of this line dates back to 1976, when the Union Bank of Switzerland rescued the then failing funicular company.
Competition
Main competitors are
Rothschild,
Citigroup,
Credit Suisse,
Deutsche Bank,
Goldman Sachs,
JP Morgan,
Lehman Brothers,
Morgan Stanley, and
Merrill Lynch among others.
Workplace
Diversity
UBS was named one of the 100 Best Companies for Working Mothers living in the U.S. in 2006 for the fourth consecutive year
[7] by U.S. based ''
Working Mothers'' magazine. It is a member of the Stonewall Diversity Champions scheme and has active Gay and Lesbian, ethnic minority, and women's networking groups.
Records
The UBS trading floor in Stamford, Connecticut holds the
Guinness World Record as the largest securities trading floor in the world. The 103,000 square-foot operation has 40 foot arched ceiling freeing it of columns or walls. The size of three football fields and home to 1,400 traders and staff who handle about $1 trillion worth of transactions a day. It is roughly 227 wide by 410 feet long.
Financials
In full-year 2006, UBS reported net profit attributable to UBS shareholders (“attributable profit”) of CHF 11,253 million, with CHF 11,249 million from continuing operations and CHF 4 million from discontinued operations.
For the year ended
December 31,
2006
★ Net profit CHF 11,253 million
★
Moody's long-term credit rating: Aaa (Upgraded on April 20, 2007 from Aa2)
★ Employees: 81,577
Major Sponsorship Deals
★ Team
Alinghi (
America's Cup)
★ Athletisma Lausanne (
Golden League)
Significant controversies
★ In January 1997,
Christoph Meili, a night watchman at the Union Bank of Switzerland (as UBS was then known), found the bank historian destroying archives compiled by a subsidiary that had extensive dealings with
Nazi Germany, in direct violation of a recent Swiss law (adopted on
December 13,
1996) protecting such material. UBS acknowledged that it had "made a deplorable mistake", but maintained that the destroyed archives were unrelated to the
Holocaust. Meili was suspended from his job at the security company that served UBS, following a criminal investigation into whether his
whistleblowing had violated bank secrecy laws.
[8]
★ In 2001, UBS was blamed for refusing to extend
Swissair's line of credit, forcing a grounding of Swissair's planes on
October 2,
2001. UBS Chairman
Marcel Ospel was blamed by many for ostensibly evading the request for an extension of Swissair's line of credit, and the day after the grounding, thousands of demonstrators marching in front of the Swissair headquarters carried a banner reading "Bin Ospel".
★ In April 2002,
Bank of America sued five people who left its asset- and mortgage-backed securities groups for UBS, alleging that the five conspired to steal trade secrets, proprietary software and clients from Bank of America . Bank of America filed a lawsuit for US$ 20 million against Shahid Quraishi, Peter Faigl, Paul Scialabba, Reggie DeVilliers and Daniel Huang, who had previously worked for their asset-backed group based in
Charlotte.
[9]
★ On
March 202003 UBS client,
HealthSouth and its founder/CEO
Richard M. Scrushy were accused by the
U.S. Securities and Exchange Commission (SEC) of an
accounting scandal where the company's earnings were falsely inflated by $1.4 billion. In 1996, Scrushy allegedly instructed the company's senior officers and accountants to falsify company earnings reports in order to meet investor expectations and control the price of the company's stock. In certain fiscal years, the company's income was overstated by as much as 4700 percent. The $1.4 billion represents more than 10 percent of the company's total assets. Three senior bankers at UBS
Howard Capek,
Benjamin Lorello and
William McGahan, all whom had extremely close relationships with HealthSouth's management, all testified for congressional hearings, but none was convicted of any wrongdoing. McGahan, who was in jeopardy of losing his employment with the firm at the height of the scandal
[10], later resigned on
April 10,
2004 for ''personal'' reasons not related to the scandal.
[11]
★ On
May 10 2004 ''"UBS recognizes that very serious mistakes were made."''
–after UBS was fined,
$100 million by the U.S.
Federal Reserve for illegally transferring dollars from a Fed deposit – an account set up by the Fed in a commercial bank – at UBS to
Iran, Cuba and other countries under a U.S. trade embargo.
[12]
★ In April 2005, UBS lost the high profile case ''Zubulake v. UBS Warburg'', a
discrimination and
sexual harassment suit. The plaintiff
Laura Zubulake, a former institutional equities saleswoman at the company's Stamford office, convinced the jury that her manager,
Matthew Chapin, had denied her important accounts and mocked her appearance to co-workers. Also, she claimed that there were several
sexist policies in place, such as entertaining clients at
strip clubs that made it difficult for women to socialize and foster business contacts with clients.
[13] An important event in the case was the inability of UBS Warburg to produce several incriminating
e-mails of which Zubulake could provide records. The plaintiff was able to prove that UBS had destroyed relevant e-mails after the
litigation hold had been in place. Because of this,
federal judge Shira Scheindlin gave the
jury an "
adverse inference" instruction, essentially stating that the jury had to assume that the missing e-mails provided damning evidence against the defendant. UBS was ordered to pay the plaintiff $9.1 million in compensatory damages (including back pay and professional damage), and $20.2 million in punitive damages. The case was seen as a landmark in the realms of
e-discovery,
document retention,
computer forensics, and
human resources, particularly because the defendant's inability to produce electronic documents shifted the
burden of proof to the defendant.
[14]
★ The Securities and Exchange Board of India (
SEBI) alleged that UBS had played a role in the 2004
Black Monday stock market crash which followed the National Democratic Alliance government’s defeat in the general elections. SEBI's ruling of
May 17,
2005 barred UBS from issuing or renewing participatory notes for a period of one year.The ban was later lifted on appeal, as a result of a government tribunal ruling on September 9, 2005.
★ On
October 18,
2005, three
African-American employees filed a class action lawsuit against the company in the United States District Court for the Southern District of New York alleging racial discrimination in hiring, promotion and other employment practices. The three plaintiffs in ''Freddie H. Cook, Sylvester L. Flaming Jr. and Timothy J. Gandy v. UBS Financial Services, Inc.'', claim that segregation and discrimination in job assignments and compensation were widespread and the firm had done nothing to diversify its workforce. The lawsuit also claims offices operating in
Largo,
Maryland and
Flushing,
New York were illegally created to serve African-Americans and Asian-Americans respectively, and that the firm’s management frequently ridiculed the Largo branch office and its staff, referring to it as a “diversity” office. On
April 23,
2007, U.S. District Judge, Peter J. Messitte, granted plaintiff's request to dismiss the class allegations without prejudice. As a result of this dismissal, the case now comprises the individual claims of three plaintiffs.
[15][16]
★ In an article published in
BusinessWeek on
February 26,
2007, it was announced that the firm was under investigation by federal prosecutors in the United States after it was discovered that traders working for at least two unidentified hedge funds were paying a UBS employee for information on impending ratings changes on stocks.
[3] It was later announced on March 1st, that Mitchel S.Guttenberg, an executive director in the firm's equity research department, was being charged along with 13 other individuals from various firms with insider-trading fraud of more than $15 million.
[17]
See also
★
European Financial Services Roundtable
References
1. "Corporate FAQ"
2. "History of UBS (1937-1939)"
3. [1]
4. "UBS's Investment Bank Chief Costas to Run Hedge Fund"
5. "Traders at UBS offered bn in bonuses"
6. "UBS Posts Lower Earnings and Closes Hedge Fund "
7. "UBS Named a 2006 Working Mother 100 Best Company by Working Mother Magazine"
8. "Bank Says Shredded Papers May Not Have Involved Nazis, New York Times, January 16, 1997"
9. BofA asks M in dispute vs. ex-employees from the Charlotte Business Journal 22/07/2002
10. HealthSouth Ex-CFO Helps Suit from the Wall Street Journal
11. HealthSouth: Auditors and Banks from University of Wollongong library
12. [2]
13. million award in UBS in bias suit from International Herald Tribune 08/04/2005
14. ''UBS Must Pay Ex-Saleswoman .3 Mln in Sex Bias Case'' from Bloomberg 06/04/2005
15. Lawsuit alleges discrimination at UBS:Ex-employees say brokerage firm's diversity attempts mocked non-whites from ''msnbc.com'' 18/10/2005
16. NATIONWIDE CLASS ACTION FILED AGAINST UBS FINANCIAL SERVICES, INC. ALLEGING A COMPANY-WIDE PRACTICE OF RACIAL DISCRIMINATION from ''Berger & Montague'' 18/10/2005
17. UBS Executive, Ex-Morgan Lawyer Charged With Fraud from Bloomberg 01/03/2007
★ Nolmans, Erik (Nov. 14, 2005). "UBS Fastens its Seatbelts". ''
Fortune'', p. 20.
★ Vincent, Isabel. ''Pursuit of Justice''. New York: Morrow, 1997.
External links
★
Official website
★
Yahoo! - UBS AG Company Profile
★
AdvancedTrading - UBS Trading Floor photo gallery
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