UBS AG, having reported a fourth straight quarterly loss caused by writedowns related to subprime mortgages, plans to separate its investment banking and wealth management units.
After the Zurich banking company reported a loss for the second quarter, its chairman, Peter Kurer said Tuesday that it will give its three business divisions more autonomy to increase "strategic flexibility." The decision adds to speculation the company may eventually jettison the securities unit, JPMorgan Chase & Co. analyst Kian Abouhossein said in a note to clients.
Mr. Kurer will abandon the effort by his predecessor, Marcel Ospel, to integrate the divisions. Record losses at the securities unit led to more withdrawals than new investments at the private bank for the first time in almost eight years. UBS, the European bank hardest hit by the collapse of the U.S. subprime mortgage market, has faced calls from investors, including former UBS president Luqman Arnold, to split off the investment bank.
"They bought themselves some time," said Joerg de Vries-Hippen, who oversees about $26 billion, including UBS stock, as chief investment officer for European equities at Allianz Global Investors in Frankfurt.
"By separating the business units, they are showing that they are listening to investors but not going as far as breaking up the universal bank business model."
UBS, Switzerland's biggest bank, reported a second-quarter net loss $329 million, compared with a $5.45 billion profit a year earlier. About $3.73 billion in tax credits cushioned the loss. UBS said it does not expect the "adverse economic and financial trends" that led to the quarterly loss to improve in the second half.