With UBS expecting to write down $19 billion in the first quarter of 2008 on U.S. real estate and related structured credit positions and a reported net loss of about $12 billion, its chairman — Marcel Ospel — is not seeking re-election at the firm’s annual meeting on April 23. In addition, the brokerage firm has completed a rights issue, fully underwritten by four international banks, to raise some $15 billion. This comes about three months after write-downs of some $10 billion were announced by the Swiss-based institution.
“We believe this capital increase and the creation of a vehicle to separate problem assets from the remainder of our businesses will allow us to return to sustainable value creation over time,” says CEO Marcel Rohner.
Still, the firm’s situation is by no means fully resolved, as Rohner acknowledges. “However, the environment remains difficult, and while we are committed to further substantially reducing our exposures we do not want to undertake sales of positions at severely distressed levels,” he explains.
In the quarter ended December 31, UBS wealth-management operations in the United States included nearly 8,250 advisors, up 5 percent from 7,900 a year earlier and up 1 percent from 8,175 in the quarter ended September 30, according to company reports. Revenue or sales per advisor stood at $179,000 for the fourth quarter, a jump of $6,000 from the third quarter.
Client assets for the unit stood at about $850 billion. Net new money in the fourth quarter, about $8 billion, was up from roughly $5 billion in the earlier period. For the full year, net new money totaled about $25 billion.
Pre-tax profits for the U.S. wealth-management unit, led by Marten Hoekstra, for the full year grew about 25 percent to roughly $700 million. In fourth quarter 2007, pre-tax profit was up about 15 percent to $180 million.
In the first quarter of 2008, UBS says, it substantially reduced its real-estate related positions through both valuation adjustments and significant disposals. It also has formed a new unit to hold certain currently illiquid U.S. real estate assets.