UBS Exec: Q1 'One of the Worst' in Recent History

Ermotti said there has been very little merger or initial public offering business outside of the U.S., with investment banking revenues down about one third compared with a year ago.

It’s a sharp contrast with the beginning of 2018, when market volatility surged to a near five-year high, leading UBS and other banks to profit from a boom in trading. Now, cautious clients and muted markets are making Ermotti’s job more difficult.

UBS in October presented a slate of ambitious new targets to investors that depended in part on factors outside of the bank’s control, such as the performance of global equities and other assets.

With a darker outlook setting in, the bank is turning to cuts to make up for lost assets and revenues.

Wealth Management

Global wealth management revenue is down about 9 percent from a year ago, Ermotti said, with the gap narrowing as the quarter proceeded. Net new money should be positive, and the bank aims to offset the drop in revenue with a 5 percent reduction in costs, he said.

The investment bank is also dealing with the loss of Andrea Orcel, a star banker who had turned the trimmed-down investment bank into a bright point of quarterly earnings. The unit posted a $47 million loss in the last months of 2018.

Orcel left the bank in September, when he accepted an offer to become chief executive officer of Banco Santander SA. That offer was later rescinded in a dispute over pay.

Ermotti is struggling to persuade investors that he can build out UBS’s leadership in European banking.

The stock lost 32 percent of its value last year despite positive financial results, leading the board of directors to express its disappointment in the share price in the bank’s annual report last week.