Swiss Bank UBS restructures its investment arm

UBS, as part of its restructuring strategy, has appointed Andrea Orcel as Chief Executive Officer of its Investment Bank and trimmed its staff strength by 10,000, the Swiss Bank said Tuesday. The lines of business to be exited will include many that do not meet their cost of capital sustainably or are in areas with high operational complexity or long tail risks likely to weigh on future returns. Exited businesses and positions will be transferred to, and reported in, the Corporate Center from the first quarter of 2013, the bank said. Carsten Kengeter who will step down from the Group Executive Board and will be responsible for the successful management of the exited Investment Bank businesses and positions. As a consequence of simplifying its product portfolio and production processes, in 2015 UBS expects its headcount to be around 54,000 compared with approximately 64,000 today. Group CEO Sergio P. Ermotti said, “We will continue to deliver the very best of UBS to all our clients and, to support this, over the next three years, we will make investments totaling US$ 1.606 Billion (1.5 Bn Swiss francs) across all of our businesses. The Investment Bank will continue to be a significant global player in its core businesses, and we intend to forcefully compete to increase our market share in these areas of strength.” Savings will be achieved as a result of the actions UBS is taking in its Investment Bank, as well as further Group wide efficiency measures. The complete exit of business lines from the Investment Bank will eliminate associated front-to-back costs, the bank said. UBS plans to focus on its private bank and a smaller investment bank and avoid much of the riskier trading business which was responsible for the bulk of its losses. The bank lost US $42Bn (39bn Swiss francs)during the financial crisis and had to be bailed out by the Swiss authorities.