UBS Essay

UBS AG is a global financial services company headquartered in Basel and Zurich, Switzerland. The company identifies itself as the leading global wealth management organization, a top-tier investment banking and securities firm, one of the largest global asset managers, as well as a market leader in Swiss private and commercial banking. The company also characterizes itself as a global, growth-oriented business that creates value by combining its expertise and finding synergies across the board.

UBS, as it is known now, was created in 1998. The company’s roots, however, go deep into the 18th century when the first branch of UBS’s predecessor, the Swiss Bank, was established. The company grew organically, and through various mergers and acquisitions, including such prominent acquisitions as the investment purchasing of banks Dillon Read (United States) and S. G. Warburg (United Kingdom). In 1998, the bank’s direct predecessor, the Union Bank of Switzerland, merged with the Swiss Bank Corporation (SBC) creating a new company called UBS—which at that time ceased to be just an abbreviation for the Union Bank of Switzerland, but rather became a new brand name. In 2003, all UBS businesses and business groups—including UBS Warburg, UBS Paine Webber,

UBS Asset Management, and so forth—relaunched under the common UBS brand name and under the same corporate logo—the three crossing keys that represent confidence, security, and discretion.

At present, UBS provides its clients with a variety of services, which are divided into three core business components. As a wealth manager, UBS provides its high-net-worth clients with customized solutions, ranging from asset management to estate planning to corporate finance. As a global asset manager, UBS advertises innovative investment management solutions to private, institutional, and corporate clients. These solutions involve offering its clients investment instruments associated with traditional assets, such as real estate, fixed income assets, and so forth, as well as some more advanced investment vehicles, like multimanager funds, hedge funds, and so on. As an investment banker and securities trader, UBS offers its corporate, institutional, and other clients research and securities products—anything from foreign exchange, energy and precious metals trading, fixed income instruments, and many others.

Although UBS has always positioned itself as a good corporate citizen, the company has not been able to avoid some major controversies throughout the years. For instance, in 2001, the company was accused of “sinking” Swissair by refusing to extend the line of credit to the national carrier in distress. In 2004, Indian government and business circles in India alleged that UBS played a significant role in the stock market crash, which resulted in the change of political power in that country. In 2005, the company was accused of racial discrimination in hiring and promotion, as well as of unfair employment practices in some of its U.S. branches. Although the lawsuit was later dismissed, it has left UBS with a somewhat damaged reputation. The most recent controversy played out in the last quarter of 2007, when Peter Wulffi had to step down as chief executive officer (CEO) of the company, bowing to pressure from the major stakeholders, amid enormous write-offs related to banking losses in the United States.

Recent Financial Performance

Up to the end of 2006, UBS has remained one of the world’s most profitable financial services institutions, with posted net income of about CHF11.25 billion (or $9.4 billion at the time). Until 2007, the mixture of financial expertise, prudence, and risk aversion seemed to be working perfectly well for UBS and its major stake holders. Starting in 2007, however, the financial performance of UBS has gone down tremendously, mainly because of massive losses the company had to endure due to the U.S. subprime mortgage crisis, as well as some expert-recognized blunders in the area of structured products and leveraged finance. In April 2008, the company reported that it expected to post net losses of about CHF12 billion (approximately $12 billion) in the first quarter of 2008, and that it would also take further losses and write-offs totaling approximately $19 billion on U.S. real estate and credit positions.

Despite financial underperformance and controversies, UBS remains a strong player in the financial services markets worldwide. The company’s other business units are strong, and are expected to offset, to a certain extent, major financial losses in the banking sector. UBS has been thought to be among the best companies to work for—as an example, it has various active diversity programs, and it has been recognized as one of the 100 Best Companies for Working Mothers in the United States for several years in a row. UBS is also well known for its many sports sponsorship activities, including its close affiliation with Alinghi, an international sailing team participating in the prestigious America’s Cup competition.

Bibliography:

  1. The Economist.com, “Down the Matterhorn,” www.economist.com (cited March 2009);
  2. com, “Lawsuit Alleges Discrimination at UBS: Ex-Employees Say Brokerage Firm’s Diversity Attempts Mocked NonWhites,” www.msnbc.msn.com (cited April 2008);
  3. Dirk Schutz, The Fall of the UBS: The Reasons Behind the Decline of the Union Bank of Switzerland (Pyramid Media Group, 2000);
  4. UBS, “History of UBS (1937–1939),” www.ubs.com (cited March 2009);
  5. UBS, “Swiss Bank UBS in a Few Figures,” www.ubs.com (cited March 2009);
  6. Wetfeet, UBS AG: Wetfeet Insider Guide (Wetfeet.Com, 2009).

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