At UBS, Mr. Grübel's Job Isn't Getting Any Easier

Still buffeted by the financial crisis, UBS AG's move to boost its capital base underlines its continuing struggles to return to profitability even as its competitors are minting money.

The bank raised 3.8 billion Swiss francs ($3.5 billion) late last week by placing 293 million shares, or 8.4% of its capital, with a few investment institutions. It marked the fourth time in less than two years that UBS shareholders have suffered a dilution of their holdings.

At the same time, the bank announced it would post a loss for the second quarter and said customers continued to pull money from its flagship wealth-management business.

The announcement emphasized the hill the bank's new boss, Oswald Grübel, a former top banker with rival Credit Suisse Group AG who took over in February, must still climb to turn around the bank.

Many of UBS's high-net-worth customers have been scared off by the bank's dispute with the U.S. Internal Revenue Service, which wants it to hand over details of 52,000 accounts. A civil trial over that demand is scheduled to start July 13 in a federal court in Miami unless a settlement is reached.

The share placement appears to have been pressed upon the bank by the Swiss authorities, concerned about further deterioration in borrower creditworthiness in the face of recession, analysts said.

The Swiss government "wants to see higher capital levels so that banks can absorb losses because Switzerland would struggle to do so," said David Williams, an analyst at Fox-Pitt Kelton. Swiss bank assets are equal to more than six times Swiss gross domestic product.

UBS took pains to highlight that it isn't raising capital due to one isolated, negative event, but instead to "take advantage of current market opportunities."

UBS announces net loss expectations for Q2 2009

Jun 26, 2009 -Financial services firm UBS AG (NYSE:UBS) (SWX:UBSN) reported on Thursday that it expects to incur a net loss for its second quarter 2009, based on preliminary results for April and May and estimated results for June.

Its own previously announced credit and restructuring charges will account for most of the expected loss. The quarterly operating result will improve, compared to the first quarter of 2009, as market conditions are better, affecting the Investment Bank, along with lower losses and write downs on legacy risk positions.

In the quarter to date, net new money has been negative in the three wealth and asset management divisions.

The group's Tier 1 capital ratio at 30 June 2009 is expected to be higher than at 31 March 2009 due to a reduction in risk-weighted assets. This ratio is not affected by own credit charges.

The second quarter financial results will be reported by UBS on 4 August 2009.

UBS names new Asia Pacific CEO

HONG KONG, June 25 (Reuters) - UBS AG (UBSN.VX) on Thursday announced the appointment of Chi-Won Yoon as chairman and CEO of Asia Pacific, succeeding Rory Tapner, who is leaving the bank after 25 years.

Yoon joined UBS in 1997 as Head of Equity Derivatives, becoming Head of Asia Equities in 2004, Head of Asia Pacific Equities in 2008, and Head of Equities and Fixed Income for the region earlier this year.

Yoon inherits a franchise with a strong equities and M&A platform across Asia Pacific. But the bank also faces several challenges.

Among the first obstacles is getting the new leadership in place. Robert Rankin, the region's former head of the investment bank, stepped down earlier this year. People inside and outside the bank credited Rankin with playing a key role in building UBS' business in Asia. The bank filled Rankin's shoes with its Asia Pacific head of M&A and its head of Financial Institutions Group.

UBS, like it's peers, also lost a lot of bankers in Asia, either through layoffs or to other banks. After posting huge losses from exposure to subprime mortgage securities, the bank severely cut back on bonuses, which prompted many to leave.

The bank also lost two highly respected Asia Pacific derivatives bankers earlier this year and a team of bankers in that group to a rival. But despite some setbacks, UBS has kept its Asia Pacific franchise largely in tact, remaining one of the top equities house in the region.

In addition to 9,500 employees in Asia Pacific, the bank says it has the largest wealth management business in the region.

Tapner took over the top Asia role in April 2004, after 5 years in London as joint global head of investment banking. In an interview with Reuters, Tapner said he will fly back to London on Friday to be with his family. His wife and four children remained in London during his Asia tenure, he said, knowing how much travel time he'd have to log as CEO of the region.

"The targets he set, to substantially grow our revenues and profits from the region, have all been achieved, and the share of group revenues represented by APAC now exceed 20 percent," said UBS CEO Oswald Grubel in an internal memo obtained by Reuters. "This from a business that represents only 6 percent of the group's balance sheet and risk weighted assets, and employs 11 percent of our global workforce." Tapner also led the execution of the bank's China strategy, the memo says.

Yoon holds a bachelor's degree in Electrical Engineering and a master's in Finance from the Massachusetts Institute of Technology. After starting out as an electrical engineer for the U.S. space shuttle program, he joined Wall Street in 1986 covering derivatives.

Property market warning

THE optimism in Singapore's property market is unsustainable, given an impending over-supply of new flats, weak rental demand and the fact that the country remains in a recession. That is the pessimistic view of two research houses, which concluded that the price recovery is highly fragile.

Citigroup said the market is not at the start of a cyclical upswing and that the spike in home prices cannot last. 'We caution against over-optimism, because fundamentally the market is not ready for a sustained price recovery,' analyst Wendy Koh wrote in a report on Thursday.
In the same report, she downgraded Allgreen to 'sell', putting the developer in the same 'sell' basket as City Developments, CapitaLand and Keppel Land. Citi also downgraded Wing Tai to 'hold'. While there has been strong resale demand, the call for new homes is patchy and rental demand remains weak, Ms Koh said.

Resale prices of some projects have risen and some developers are reducing discounts for new projects but Nomura Singapore believes these seemingly positive factors are misleading. It maintained that the demand for new homes was boosted by price discounting and the interest absorption scheme.

'A rapid deterioration in rents amid higher supply and weaker demand has undermined yield expectations,' it said. Nomura also pointed to the damaging effect of rising unsold inventory and forced sales by defaulting or distressed buyers who bought on deferred payment. These properties form a source of 'hidden' inventory that will place further pressure on asking prices.

Temasek loses £500m on Barclays sell-off

Temasek, the Singapore state investment company, sold out of its shareholdings in Barclaysthis year, making an estimated £500m ($815m) loss on its investment. Temasek reduced its stake of almost 2 per cent in the UK's third-largest bank over several weeks from the turn of the year, according to people familiar with the sale.

Barclays shares fell as low as 51p in January on fears that it would join the list of UK banks needing a government bail-out. Since early March, however, they have risen fivefold amid a broader recovery. They fell 14.5p yesterday to close at 259p.

By contrast, Abu Dhabi-based International Petroleum Investment Company generated a healthy profit from its Barclays investment. IPIC sold its entire holding of 1.3bn shares on Tuesday, turning a £3.5bn investment into £5bn in seven months.