UBS

UBS AG

File:Ubs diversity1.gif
Company type	Public (NYSE: UBS; SWX:UBSN; TYO: 8657)
Industry	Finance
Predecessor	Deutsche Länderbank
Founded	1998 merger of the Union Bank of Switzerland and the Swiss Bank Corporation
Headquarters	Basel & Zürich, Switzerland
Key people	Marcel Ospel, Chairman Marco Suter, Vice Chairman Marcel Rohner, CEO
Products	Financial Services
Revenue	$105.59 billion (USD)
Net income	7,630,000,000 United States dollar (2022)
Number of employees	78,140 (2007)
Website	www.ubs.com

UBS AG (NYSE: UBS; SWX: UBSN; TYO: 8657) is a diversified global financial services company, headquartered in Basel and Zürich, Switzerland. It is the world's largest manager of Private Wealth assets, and is also the second largest bank in Europe, by both market capitalisation and profitability. UBS has a major presence in the U.S., with its American headquarters located in Manhattan (Investment Banking); Weehawken, New Jersey (Private Wealth); and Stamford, Connecticut (Capital Markets). UBS's retail offices are located throughout the United States, and in over fifty other countries. UBS is an initialism which originated from a predecessor firm, the Union Bank of Switzerland, however UBS ceased to be considered a representational acronym after its 1998 merger with Swiss Bank Corporation.

UBS's global business groups are Private Banking, Investment Banking, and Asset Management. Additionally, UBS is one of the leading providers of retail banking and commercial banking services in Switzerland. Overall invested assets are 2.766 trillion Swiss francs (CHF), shareholders' equity is 47.850 billion CHF and market capitalization is 150.663 billion CHF.

The AG in the company's name means Aktiengesellschaft, which is the equivalent to a shareholder-based corporation in the USA.

In some ways, UBS has evolved on a similar path to its cross-town rival Credit Suisse. Both are Swiss commercial and retail banks which bought major US investment banks (and in the case of UBS, a leading retail stock broker, PaineWebber).

History

UBS has its roots as a Swiss Bank, originating in 1747, when its first branch was established in the Swiss region of Valposchiavo. However, the three core components of the company date back to the second half of the nineteenth century. Union Bank of Switzerland, Swiss Bank Corporation, and Paine Webber or their antecedents, were all founded in the 1860s and 1870s.

Modern UBS was formed through a merger of the Union Bank of Switzerland and the Swiss Bank Corporation in June 1998. SBC had previously built a global investment banking business through its acquisitions of Dillon Read in New York and S.G. Warburg in London. The first chairman of the merged bank had to step down in October 1998 due to the Long-Term Capital Management crisis, which affected the Union Bank of Switzerland. In 2000, UBS acquired PaineWebber Group Inc. to become the world's largest wealth management firm for private clients. Invested assets in all wealth management businesses, including the U.S., total CHF 2.766 trillion.

On June 9th, 2003, all UBS business groups rebranded under the UBS name. UBS Paine Webber, UBS Warburg, UBS Asset Management, and others became simply "UBS". As a result of the rebranding, UBS took a $1B writedown for the loss of goodwill associated with the retirement of the Paine Webber brand. UBS is no longer an acronym but is the company's brand, like 3M. Its logo of three keys stands for confidence, security, and discretion.

UBS is present in all major financial centers worldwide, with offices in 50 countries. According to the UBS website, the bank had 80,060 employees on March 31, 2007. The 2006 Q1 report breaks these Financial Business permanent staff down by region as: 25,645 in Switzerland, 27,356 in the Americas, 11,341 in Europe, the Middle East and Africa (not including Switzerland), and 5,868 in Asia and Australasia.

Management

Marcel Ospel is the Chairman of the Board of Directors. The Group Executive Board is the executive body of the company. Its members are:

• Executive Vice Chairman: Marco Suter
• Group CEO: Marcel Rohner
• Chairman and CEO Global Wealth Management & Business Banking: Raoul Weil
• Chairman and CEO Global Asset Management: John A. Fraser
• Chairman and CEO Investment Bank: Huw Jenkins
• Group General Counsel: Peter Kurer
• Group Chief Financial Officer: Clive Standish
• Group Chief Risk Officer: Walter Stuerzinger
• Chairman & CEO Americas: Robert Wolf
• Chairman and CEO Asia Pacific: Rory Tapner

Businesses

See also Swiss banking and Zurich

UBS is organized in four business groups: Global Wealth Management & Business Banking, Investment Bank, Global Asset Management, and Corporate Center.

Dillon Read Capital Management

In June 2006, UBS announced the launch of Dillon Read Capital Management, an alternative investment management business, in an effort to capture new business and retain staff that UBS was losing to other hedge funds . John Costas, then CEO of UBS Investment Bank, left the position to lead up the new DRCM business. UBS guaranteed a $1B bonus pool over the first three years for the 120 employees to discourage traders from leaving .

On May 3, 2007, UBS announced the closure of Dillon Read Capital Management due to "operational complexities." DRCM ran up a loss of $124M in the first quarter..

UBS Polybahn

One of the more unusual businesses operated by UBS AG is the UBS Polybahn, a funicular railway in Zürich, Switzerland. The group's ownership of this line dates back to 1976, when the Union Bank of Switzerland rescued the then failing funicular company.

Competition

Main competitors are BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Morgan Stanley, Merrill Lynch, and Natixis among others.

Workplace

Diversity

UBS was named one of the 100 Best Companies for Working Mothers living in the U.S. in 2006 for the fourth consecutive year by U.S. based Working Mothers magazine. It is a member of the Stonewall Diversity Champions scheme and has active Gay and Lesbian, ethnic minority, and women's networking groups.

Records

The UBS trading floor in Stamford, Connecticut holds the Guinness World Record as the largest securities trading floor in the world. The 103,000 square-foot operation has 40 foot arched ceiling freeing it of columns or walls. The size of three football fields and home to 1,400 traders and staff who handle about $1 trillion worth of transactions a day. It is roughly 227 wide by 410 feet long.

Financials

In full-year 2006, UBS reported net profit attributable to UBS shareholders (“attributable profit”) of CHF 11,253 million, with CHF 11,249 million from continuing operations and CHF 4 million from discontinued operations.

For the year ended December 31, 2006

• Net profit CHF 11,253 million
• Moody's long-term credit rating: Aaa (Upgraded on April 20, 2007 from Aa2)
• Employees: 78,140

Major Sponsorship Deals

• Team Alinghi (America's Cup)
• Athletisma Lausanne (Golden League)

Significant controversies

• In January 1997, Christoph Meili, a night watchman at the Union Bank of Switzerland (as UBS was then known), found the bank historian destroying archives compiled by a subsidiary that had extensive dealings with Nazi Germany, in direct violation of a recent Swiss law (adopted on December 13, 1996) protecting such material. UBS acknowledged that it had "made a deplorable mistake", but maintained that the destroyed archives were unrelated to the Holocaust. Meili was suspended from his job at the security company that served UBS, following a criminal investigation into whether his whistleblowing had violated bank secrecy laws.

• In 2001, UBS was blamed for refusing to extend Swissair's line of credit, forcing a grounding of Swissair's planes on October 2, 2001. UBS Chairman Marcel Ospel was blamed by many for ostensibly evading the request for an extension of Swissair's line of credit, and the day after the grounding, thousands of demonstrators marching in front of the Swissair headquarters carried a banner reading "Bin Ospel".

• In April 2002, Bank of America sued five people who left its asset- and mortgage-backed securities groups for UBS, alleging that the five conspired to steal trade secrets, proprietary software and clients from Bank of America . Bank of America filed a lawsuit for US$ 20 million against Shahid Quraishi, Peter Faigl, Paul Scialabba, Reggie DeVilliers and Daniel Huang, who had previously worked for their asset-backed group based in Charlotte.

• On March 202003 UBS client, HealthSouth and its founder/CEO Richard M. Scrushy were accused by the U.S. Securities and Exchange Commission (SEC) of an accounting scandal where the company's earnings were falsely inflated by $1.4 billion. In 1996, Scrushy allegedly instructed the company's senior officers and accountants to falsify company earnings reports in order to meet investor expectations and control the price of the company's stock. In certain fiscal years, the company's income was overstated by as much as 4700 percent. The $1.4 billion represents more than 10 percent of the company's total assets. Three senior bankers at UBS Howard Capek, Benjamin Lorello and William McGahan, all whom had extremely close relationships with HealthSouth's management, all testified for congressional hearings, but none was convicted of any wrongdoing. McGahan, who was in jeopardy of losing his employment with the firm at the height of the scandal , later resigned on April 10, 2004 for personal reasons not related to the scandal.

• In April 2005, UBS lost the high profile case Zubulake v. UBS Warburg, a discrimination and sexual harassment suit. The plaintiff Laura Zubulake, a former institutional equities saleswoman at the company's Stamford office, convinced the jury that her manager, Matthew Chapin, had denied her important accounts and mocked her appearance to co-workers. Also, she claimed that there were several sexist policies in place, such as entertaining clients at strip clubs that made it difficult for women to socialize and foster business contacts with clients. An important event in the case was the inability of UBS Warburg to produce several incriminating e-mails of which Zubulake could provide records. The plaintiff was able to prove that UBS had destroyed relevant e-mails after the litigation hold had been in place. Because of this, federal judge Shira Scheindlin gave the jury an "adverse inference" instruction, essentially stating that the jury had to assume that the missing e-mails provided damning evidence against the defendant. UBS was ordered to pay the plaintiff $9.1 million in compensatory damages (including back pay and professional damage), and $20.2 million in punitive damages. The case was seen as a landmark in the realms of e-discovery, document retention, computer forensics, and human resources, particularly because the defendant's inability to produce electronic documents shifted the burden of proof to the defendant.

• The Securities and Exchange Board of India (SEBI) alleged that UBS had played a role in the 2004 Black Monday stock market crash which followed the National Democratic Alliance government’s defeat in the general elections. SEBI's ruling of May 17, 2005 barred UBS from issuing or renewing participatory notes for a period of one year.The ban was later lifted on appeal, as a result of a government tribunal ruling on September 9, 2005.

• On October 18, 2005, three African-American employees filed a class action lawsuit against the company in the United States District Court for the Southern District of New York alleging racial discrimination in hiring, promotion and other employment practices. The three plaintiffs in Freddie H. Cook, Sylvester L. Flaming Jr. and Timothy J. Gandy v. UBS Financial Services, Inc., claim that segregation and discrimination in job assignments and compensation were widespread and the firm had done nothing to diversify its workforce. The lawsuit also claims offices operating in Largo, Maryland and Flushing, New York were illegally created to serve African-Americans and Asian-Americans respectively, and that the firm’s management frequently ridiculed the Largo branch office and its staff, referring to it as a “diversity” office.

• In an article published in BusinessWeek on February 26, 2007, it was announced that the firm was under investigation by federal prosecutors in the United States after it was discovered that traders working for at least two unidentified hedge funds were paying a UBS employee for information on impending ratings changes on stocks.[2] It was later announced on March 1st, that Mitchel S.Guttenberg, an executive director in the firm's equity research department, was being charged along with 13 other individuals from various firms with insider-trading fraud of more than $15 million.

See also

• European Financial Services Roundtable

References

• Nolmans, Erik (Nov. 14, 2005). "UBS Fastens its Seatbelts". Fortune, p. 20.
• Vincent, Isabel. Pursuit of Justice. New York: Morrow, 1997.

External links

• Official website
• Yahoo! - UBS AG Company Profile