UBS Outlines Reorganization; Releases Q1'09 Results

Brokerage firm is sharpening its focus on high-net-worth clients as its growth strategy.

UBS says that Wealth Management Americas - which now includes some 8,760 advisors and $625 billion in assets under management -- will consolidate its eight U.S. regions into three (Northeast, Central and West) and combine its existing market areas, stand-alone branches and private wealth offices to form 20 new market areas by July 1.

The northeast region will be based in New York, the central region in Miami and the west in Los Angeles. This simplified structure will allow the wealth-management advisor group to improve the support it provides to both clients and advisors and increase decision-making ability at the local level for the benefit of clients, according to the company

In the quarter ended March 31, 2009, Wealth Management Americas had a pre-tax loss of 35 million Swiss francs - roughly $31 million - vs. a gain of 180 million Swiss francs or $160 million a year ago.

The company says the loss was due to lower fees related to lower-average invested asset levels, a decrease in interest income and an increase in expenses primarily due to higher personnel costs in the first quarter.

Though personnel expenses decreased 5 percent as measured in Swiss francs due to lower revenue-based financial advisor compensation, severance, and salaries, this shift was partly offset by higher financial advisor-related recruitment costs. The number of personnel in the Americas unit was 19,962 on 31 March 2009, a decrease of 110 from December 31, 2008.

Financial advisors in the Americas increased by 153 to 8,760, reflecting the second consecutive quarter of net increases due to strong recruiting and retention efforts, particularly among high-producing financial advisors, the company notes. In the first quarter of 2008, the unit had 8,691 advisors. Non-financial advisor employees decreased by 263 in the most recent quarter to 11,202 due to staff reductions.

Net new money for the Americas in the first quarter of '09 was roughly $18.5 billion vs. $7.6 billion in the same quarter of '08.

UBS' wealth management and Swiss banking operations includes 3,862 advisors. This group saw a loss of some $11.6 billion in international client money in Q1'09.

In March 2009, UBS Financial Services Inc. agreed to sell up to 55 of its U.S. branches to Stifel, Nicolaus & Company by year-end. The branches are located in 24 states and employ more than 500 people, including some 320 financial advisors with assets under management of some $15 billion.

For the deal, UBS expects to receive an upfront cash payment of roughly $27 million, based on the actual number of branches and financial advisors acquired by Stifel Nicolaus. UBS will also receive annual earn-out payments for the two-year period following the closing of the transaction principally based on the performance of the UBS financial advisors who become Stifel Nicolaus employees, as well as aggregate payments of up to about $19 million for net fixed assets and employee forgivable loans.

According to UBS, this transaction will allow Wealth Management Americas to focus its resources more effectively on high net worth and ultra-high net worth clients in core markets.

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