Following a second-quarter loss of about $330 million, UBS says it will separate its business divisions into three separate units, with each having more operational authority and accountability than in the past.
The announced changes come after the company reported its latest results, which include about $5 million in write-downs and give UBS a reported total of some $42 million in write-downs since the credit-crisis started last year.
“UBS will align incentives for management and staff of each autonomous business division directly with its financial results. This will promote profit generation within an appropriate and rigorous risk framework that fully recognizes the risk/reward profile of different activities,” the company says.
To boost its retention of financial advisors, UBS Wealth Management U.S. has reportedly decided to boost the payouts of financial advisors generating at least $400,000 in annual fees and commissions. They are now expected to pocket 1.5 to 2 percent more of that revenue than in the past. This step comes after similar moves at Citigroup and Morgan Stanley.
UBS also has announced that it will continue “to invest in and develop its global wealth management business, its core asset, with the aim of strengthening both its presence in international growth markets and its leading position in Switzerland.”
“Our review has clearly revealed the weaknesses associated with the integrated “one firm” business model,” says Peter Kurer, chairman of UBS. “Some of these weaknesses, such as the blurring of the true risk-reward profile of individual businesses, are the source of substantial risk, as we have seen in the past few months. Others have led to the creation of excessively elaborate processes and unnecessary layers of complexity.