Although huge, all conquering, dollar-scooping behemoths of asset management would also seem to work.
Towers Watson and Pensions & Investments have counted up money manager dollars world-wide, once again, and when it comes to size, passive investment products are (almost) the only game in town. Read more
Alexander Friedman, global chief investment officer of UBS AG, and his colleague Kiran Ganesh, cross asset strategist at UBS Wealth Management, share their thoughts on the core issues behind the Washington impasse. For reference, Friedman is American and oversees $1.7 trillion in managed assets…
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Risk is on. The sun’s out (at least in London). Cue two fun slides from Julien Garran of UBS. Click to view.
The Aussie banks are very good companies. They are profitable, resilient, well capitalised, well managed, shareholder focused and have a very strong industry and regulatory structure. However, following the significant leveraging of the Australian & NZ households over the last thirty years they are now low growth and remain heavily exposed to housing, funding markets & unemployment risk. Read more
René Stulz and other academics members of the avowedly non-partisan Squam Lake Group have come out with an update of their well-received 2010 paper on fixing finance, post the crisis. Click below to read their fresh thoughts on banker pay and the knotty problem of properly aligning incentives.
UBS reported a fourth quarter loss of CHF1.2bn — actually CHF1.9bn, when considering Libor fines and other regulatory and legal costs, plus restructuring costs. The loss came in a little lower than the median estimate of analysts surveyed by Bloomberg.
The full monstrous PDF is here, but meanwhile, we note the FT’s Daniel Schäfer scooped an interesting change to the bank’s bonus policy for its 6,500 highest earners: Read more
Soon, it appears, we’ll have another big Libor settlement to write about — this one from RBS. Both the FT and the WSJ are tipping the fines to be in the order of £500m. The FT says it could be more than £400m to the US authorities and about £100m to the FSA; the WSJ doesn’t mention how it might breakdown between the US and UK, but says the settlement “could be completed within the next two weeks”.
Also, yikes! RBS (or specifically, an Asian unit of RBS) might have to plead guilty to some criminal charges if the US prosecutors have their way, says the WSJ.
Shockingly RBS does not like this. But… RBS may not have any choice: Read more
If you wanted to see a group of British MPs not really getting why a group of former UBS execs didn’t get that a Libor scandal was raging under their watch, the only place to be was the Thatcher Room in the House of Commons on Thursday. Read more
The competition is on! Sure, UBS is already ahead of Barclays in the FSA fine stakes, but will the inevitable embarrassing communiques beat “done for you, big boy”? Opening gambit from the FSA’s Final Notice to UBS on Wednesday morning (emphasis ours):
For example, on 18 September 2008, a Trader explained to a Broker: “if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will f[**]king do one humongous deal with you …
The FSA’s component of the UBS settlement relating to Libor and Euribor was £160m — the largest fine it has ever imposed.
The UK financial regulator made some revealing comments on the Swiss group’s transgressions, which it says “involved a significant number of employees and occurred over a period of years in a number of countries”: Read more
UBS will pay a total of CHF1.4bn ($1.5bn) — or, more than three Barclays — in fines and profit disgorgements related to Libor and Euribor claims. The payments will go to US, UK and Swiss regulators. The bank has also warned of losses totalling about CHF2 to 2.5bn for the fourth quarter, largely due to the settlements and provisioning, although CHF500m related to its restructuring.
Here is the statement: Read more
It might not be made public until Monday but the FT reports a fine above $1bn could be landing on UBS’s doorstep to settle allegations of Libor manipulation. Driven largely, it appears, by CFTC and DoJ penalties.
That’s more than double the Barclays record set in June… Read more
Definitely a turn-around for the books in the Kweku Adoboli case.
From the FSA on Monday, emphasis FT Alphaville’s (and the whole release really is worth a read): Read more
The following is a transcript of Kweku Adoboli’s last recorded phone call at UBS with members of the bank’s back office accounting team.
Not only does it reveal that Adoboli may have used Blackrock and SocGen as faux counterparties for hiding losses but that the “back-office genius” seemingly had difficulty grasping the difference between an asset and a liability (at least in public). Scrutiny of the bank’s unsettled trades, meanwhile, seems to be what prompted his eventual confession. Read more
The great UBS vs Kweku Adoboli trial has finally come to an end.
The verdict: Adoboli was sentenced to seven years for fraud related to a $2.3bn loss, but found not guilty of four counts of false accounting. Read more
It’s bad enough finding out that you’ve been made redundant when your pass fails to let you in to the building. But finding out that you’ve been sacked and replaced by a computer (which has more or less made your skills redundant)? That’s even worse.
So spare a thought for David Gallers, former head of CDS index trading at UBS, who was let go last week, to be replaced by snazzy new algo. Read more
The Swiss bank has wasted no time in starting the cost cutting programme it announced just this morning. Some people learnt of this when they tried to enter their offices on Tuesday morning, only to discover their passes weren’t working.
Our hedge fund sources also tell us that many of their UBS contacts “have red dots on their B’berg” this morning, meaning they’re not logged in. It sounds like sales staff have generally been the first to go. Read more
The story of Bradley Birkenfeld, the man who blew the whistle on UBS’s tax dodging schemes to the Department of Justice in the US, is very odd.
Freshly released from prison, Birkenfeld has now been rewarded with $104m by the Internal Revenue Service for his part in a case that saw UBS pay $780m in fines to the US authorities. Read more
Via UBS. (Click to enlarge)
From Martin Lueck and team at UBS:
Who’s winning? Read more
Courtesy of the European economics team at UBS…
UBS announced lacklustre results on Tuesday, saying it expected further weakness in investment banking in the first quarter.
But the bank also provided details of some interesting underlying trends at the bank, funding wise. The following table taken from the bank’s results statement provides a good summary (click to enlarge): Read more
UBS issued a gloomy outlook for the current year, noting the tough conditions experienced in 2011 were likely to be prolonged, meaning “traditional improvements in first quarter activity levels and trading volumes may fail to materialise fully”, the FT reports. The Swiss group warned such conditions would “weigh on” its first-quarter results, notably in investment banking. The downbeat forecast came as the group said net profits in the fourth quarter slumped to SFr393m ($426m), reflecting the severe pressures on earnings seen at some US rivals and at Deutsche Bank in Europe. Earnings were a fraction of the SFr1.66bn made in the same period the previous year and demonstrated the impact of tough markets, reluctant clients and heavy costs, in spite of savings. Fourth-quarter earnings in investment banking, as at some rivals, turned negative, with a SFr256m pre-tax loss, compared with a profit before tax of SFr100m the previous year. The poor results reflected sharply lower revenues in all the investment bank’s businesses, notably the two powerhouses of equities and fixed income, currencies and commodities.
Kweku Adoboli, the former UBS trader accused of causing the largest unauthorised trading loss in British history, has denied charges of fraud and false accounting, reports the FT. Mr Adoboli, 31, entered pleas of not guilty as he appeared for a third time at Southwark Crown Court in London after being accused of unauthorised trading following revelations of a $2.25bn loss at the Swiss bank last year. Mr Adoboli worked for UBS’s global synthetic equities division, buying and selling exchange traded funds. The not guilty plea will probably slow an investigation by the UK’s Financial Services Authority of alleged regulatory and compliance failings at UBS. The watchdog and Finma, the Swiss regulator, have jointly commissioned PwC to examine the losses and will probably receive a report next month. But any move to bring an enforcement action will be complicated by the need to protect Mr Adoboli’s right to a fair trial.
British and Swiss regulators are likely to begin enforcement proceedings against UBS for shortcomings that allowed a London trader to make unauthorised trades last year, the WSJ says, citing people familiar with the situation. In September, UBS disclosed that an employee on its London-based equity desk allegedly made unauthorised trades, and police subsequently arrested Kweku Adoboli in connection with the case. The scandal led to the resignation of chief executive Oswald Grübel shortly thereafter. A joint probe by the FSA and Switzerland’s Finma, that until now had been seen largely as a fact-finding mission to determine what went wrong, is now expected to result in regulators penalising the bank for gaps in oversight that allegedly allowed Mr Adoboli to make the trades without authorisation. Unlike the FSA, Finma does not have power to fine banks, but can force a bank to make changes such as to personnel.
January is on track to be one of the busiest in more than a decade for global covered bond sales by banks, as lenders race to secure funding after the eurozone sovereign debt crisis led to a dearth of issuance, the FT reports. The first three weeks of the year have seen a flurry of covered bond issuance, a type of over-collateralised debt that is considered very safe by investors, from northern European banks such as Aereal Bank, Lloyds Banking Group and UBS, as well as Australian lenders. So far this year $43bn has been raised by global banks using covered bonds, the second strongest start to the year since 2000, according to Dealogic. Significantly it is the first time that European banks have issued more covered bonds than senior unsecured debt, traditionally seen as the bedrock of bank funding but which in the second half of last year saw issuance in Europe slow to a crawl.
Citigroup on Tuesday sold $2.5bn of debt in its biggest bond offering since 2009. The bank lured strong interest by offering investors a hefty risk premium, or spread, of 360 basis points to US Treasuries on the five-year bonds, the FT reports, in the latest sign that US banks can still access the capital markets at a price while their European counterparts have struggled. The bonds were sold with a so-called new issuance concession of about 30bp more in yield than Citigroup’s existing five-year debt. The yield at the pricing was 4.48 per cent. Bloomberg reports that banks elsewhere geared up for covered bond issues, with UBS on Tuesday selling €1.5bn of five-year bonds for less than a third of the spread on its existing senior unsecured notes with a similar maturity. ING Bank is planning a €1.75bn issue, the agency said, citing a banker, and Credit Agricole, Caisse de Refinancement de l’Habitat, Lloyds, Norway’s Boligkreditt, and three large Australian banks were also planning covered bond sales.
Three Swiss bankers were charged with conspiring to help US citizens avoid paying taxes on $1.2bn in assets by allegedly persuading them to move their accounts from UBS once the bank fell under scrutiny, the latest sign that US authorities are expanding their investigation into Switzerland’s private banking world, the FT reports. The Department of Justice announced criminal charges on Tuesday against bankers Michael Berlinka, Urs Frei and Roger Keller. Citing a person familiar with the matter, the newspaper says each worked for Switzerland-based Wegelin. If convicted, each man faces up to five years in prison. Wegelin does not have offices in the US, according to court filings, but used a New York-based account at UBS to conduct its business. The three bankers worked out of the bank’s Zurich office, prosecutors said. Wegelin was not charged with any wrongdoing. Neither the bankers nor representatives for Wegelin could immediately be reached for comment.
A senior UBS private banker allegedly sanctioned the creation of an illegal offshore investment vehicle for one of India’s most powerful businessmen, saying that Anil Ambani’s status as a “mega-client” could justify waiving the rules, a London tribunal has been told. The FT says the claim, contained in email evidence submitted to the hearing this week, has been made in a case brought against two of UBS’s former wealth management executives by the UK’s financial regulator. The evidence shows that Kurt Kumschick, the Swiss bank’s recently deceased former marketing head for wealth management in the India-Pacific region, told two junior colleagues that whether the bank should create the Mauritius-based investment vehicle for Mr Ambani would be a “business decision” if the bank could not confirm its legality under Indian law. Mr Kumschick died this week, according to UBS officials. His estate has no representation at the tribunal.