UBS boss sets out turnaround plan

The chief executive of Swiss bank UBS says he wants the firm to make profits of $15bn in three to five years' time.

Oswald Gruebel is in charge of turning the bank around after record losses from the sub-prime crisis and a tax row with the US. He said the plan was a 'revolution', adding 'if it was easy I would not be here'. Mr Gruebel was persuaded out of early retirement to join the bank. It was his first strategic presentation since he took over in February. He has already cut 7,500 jobs and sold the firm's Brazilian unit Pactual.

UBS was one of the banks hardest hit by the sub-prime crisis and was forced to write off $50bn in sub-prime related losses. That led to a record loss of $20.7bn last year.
Mr Gruebel said: 'There will be three guiding principles: reputation, integration, execution... we want to ensure that what has happened to UBS should not happen again.'
A dispute with the US government over taxes for wealthy American customers damaged UBS's reputation and it lost clients as a result. The new UBS will be 'one that performs to the highest standard and behaves with integrity and honesty,' Mr Gruebel said.

Analysts at Zuercher Kantonalbank welcomed the news. 'UBS has announced very ambitious goals that are significantly beyond our current estimates,' they said.
Tax deal

Separately, the Swiss Justice Department gave more details of its agreement with the US government to hand over information on 4,450 UBS customers. The names of Americans with more than 1 million Swiss francs ($980,000) in undeclared bank accounts at UBS between 2001 and 2008 will be handed over to US tax authorities. If there is evidence of 'fraudulent behaviour' the threshold is lowered to 250,000 Swiss francs. Anyone who earned an average of 100,000 Swiss francs a year for more than three years could also be on the list.

The corresponding amount in US dollars varies widely because the currency lost more than a third of its value against the Swiss franc during the period covered."

Britain breaks up RBS, Lloyds in big bang for banking

LONDON (AFP) - – Britain is to force state-rescued banks RBS and Lloyds Banking Group to sell assets in a massive shake-up of the banking sector but will support them with 30 billion pounds, the government said on Tuesday.
The government expects new banks to be born as a result of the break-ups which are the result of pressure from EU competition authorities.
The parts being separated from the parent groups add up to about 10 percent of Britain's troubled retail banking market.
In return for more state aid, Lloyds and Royal Bank of Scotland (RBS) will have to cut bonuses paid to top staff and increase lending to recession-struck businesses and individuals.

UBS piles up losses, clients withdraw assets

ZURICH (AFP) - – Swiss banking giant UBS on Tuesday plunged into further losses during the third quarter as clients spooked by tax scrutiny withdrew billions of dollars of funds and assets from the bank.
The bank said in a statement that its net loss for the three months ending September 30 reached 564 million francs (373 million euros, 552 million dollars), largely hit by credit charges.
The flagship of Switzerland's banking industry also failed to stem an outflow of funds.
Customers withdrew assets amounting to 36.7 billion francs over the quarter, bringing the total outflows over the first nine months of the year to 91.1 billion francs.
The outflows were particularly marked in the United States, where the bank agreed in August to disclose details of 4,450 accounts in order to stave off potentially damaging tax fraud charges brought by US authorities.

Warren Buffett's Berkshire to buy railroad

WASHINGTON (AFP) - – Warren Buffett unveiled Tuesday a deal to take over Burlington Northern Santa Fe, one of the largest rail operators in North America, calling it a huge bet on the future of the US economy.
The billionaire investor's Berkshire Hathaway holding group said it would purchase the 77.4 percent of Burlington Northern Santa Fe (BNSF) that it does not currently own for 100 dollars per share in cash and stock.
The offer values the rail operator at 44 billion dollars, including 10 billion dollars in debt. Buffett will invest some 26.3 billion dollars for the new stake.
'It's an all-in wager on the economic future of the United States. I love these bets,' said Buffett, known in financial circles as the 'Oracle of Omaha,' for his investing acumen.
The takeover bid represents a 31 percent premium over BNSF's closing share price Monday.

UBS Re-Emerges From 9 Quarters Of FICC Losses - WSJ.com

The fixed-income, currencies and commodities group at UBS (UBS), which bore the brunt of the Swiss bank's losses in the credit crisis, reported its first positive three-month period in more than two years, helping to edge the investment bank back into the black.

UBS Investment Bank reported an adjusted pretax profit of CHF66 million, excluding a CHF1.436m charge on its own debt as a result of credit spread tightening in the third quarter. This was the first positive three-month period in nine consecutive quarters.

The result was driven by CHF985 million in revenue from the FICC business. UBS reported a CHF4.518 billion loss in the same period of last year.
On a call this morning John Cryan, chief financial officer of UBS, said the FICC result was down to improved revenues in credit trading following several key hires, stable revenues in macro and the rates business picked up a little slack from the foreign exchange trading business, which experienced narrower spreads, lower volatilities and seasonally lower trading volumes.

UBS said it expects the investment bank's performance to continue to improve into 2010, but fourth quarter results will likely reflect the early stage of its recovery. It also expects another own credit charge in the fourth quarter, as a result of further tightening of its credit spreads.

Group-wide UBS reported a third-quarter loss of CHF564m, more than double the consensus forecast which was for a CHF228 million loss, according to Citigroup research. The result was impacted by accounting charges of CHF2.15 billion. Excluding these accounting charges, the underlying pretax profit was CHF1.557 billion.

Oswald Gruebel, group chief executive of UBS, and Kaspar Villiger, chairman of the board of directors, told shareholders in a letter today: "We have successfully stabilised the firm and our focus is now on growing the business...We intend to focus on building our capital strength and on de-risking our balance sheet for several quarters to come."