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More crisis moves at UBS: Royal Dutch Shell Plc CFO, Peter Voser is a director of the Swiss bank mired in scandal

More crisis moves at UBS: Royal Dutch Shell Plc CFO, Peter Voser is a director of the Swiss bank mired in scandal

THE WALL STREET JOURNAL

UBS To Sell Mortage Assets, Cut Jobs
As First-Quarter Loss Nearly $11 Billion

By KATHARINA BART
May 6, 2008 3:22 a.m.

ZURICH — UBS AG said Tuesday it would sell $15 billion in mortgage assets to BlackRock Inc. and slash 5,500 jobs by the middle of next year, moves meant to restructure the Swiss giant’s troubled investment bank.

The Zurich-based bank will sell $15 billion in Alt-A and subprime assets to Blackrock, which will manage the holdings in a fund for distressed securities. Alt-A assets are considered slightly less risky than subprime loans.

The Zurich bank said it will ax 2,600 investment banking jobs, mainly in London and New York, after write-downs on dud mortgage securities totaling more than $37 billion. The remainder of the jobs will be cut through natural attrition across the bank’s units, UBS said.

UBS, which is whittling down its mortgage holdings, said it will continue efforts to offload the sizable book of distressed assets it still holds after the Blackrock deal to stem further damage from write-downs.

“We clearly see investors coming to the market, which we view in itself as some strong support for current price and valuation levels,” UBS Chief Executive Marcel Rohner told a conference call.

Meanwhile, UBS said it swung to a first-quarter net loss of 11.54 billion Swiss francs ($10.99 billion) after a 3.03 billion francs net profit in the year-earlier period.

In its outlook, UBS cautioned that market conditions remain tough, but indicated that it wouldn’t seek to raise more capital after two massive injections of funds earlier this year.

The major losses and subprime write-downs have led UBS to rethink its investment bank, clamping down on risk, shrinking its balance sheet, and abandoning some of the high-stakes areas such as proprietary trading.

UBS’s fixed-income arm will be hardest hit by layoffs of roughly 26% of staff, while other, less-risky areas such as corporate finance and equities will be trimmed by an average of 9%. By contrast, newer areas that UBS has only recently tiptoed into, such as commodities, will see modest cuts, investment banking chief Jerker Johansson said.

Mr. Johansson also said the bank plans to shut its municipal-finance business if it fails to find a buyer. That business employs about 300 people and brings in about $200 million in revenue annually, a person familiar with the situation earlier told The Wall Street Journal. It nonetheless remains one of the most active municipal-finance arrangers in the U.S. market.

UBS has reduced its subprime and mortgage holdings in recent quarters.

At the end of March, the bank held $15.65 billion in subprime securities, roughly half of the year-end level. Alt-A securities were trimmed to $17.1 billion from $26.67 billion, and commercial real estate to $6.33 billion from $7.78 billion. A spokesman for UBS declined to update the figures to account for the BlackRock deal.

The Swiss bank, which has swept its management ranks in recent months over the losses, has also come under fire from activist shareholder Olivant Advisers Ltd. Olivant, a 1.1% shareholder, is urging UBS to consider asset disposals or a split-up to protect its flagship private bank.

At the private bank, which caters to the financial needs of wealthy individuals, inflows of fresh funds slowed dramatically. While the private bank garnered 5.6 billion francs in fresh funds — a closely watched gauge of future business — the bank overall posted outflows of 12.8 billion francs, as money left both the asset management and business bank units.

The fresh funds are likely to disappoint investors, who are accustomed to healthy inflows for UBS. The bank also compares unfavorably to rivals such as Credit Suisse Group, where the private bank’s intake held up in the first quarter despite a net loss.

UBS shares have slid 26% so far this year, underperforming by far the Dow Jones Stoxx 600 bank index, which has edged 8.3% lower in the same period.

–Dennis K. Berman contributed to this article.

Write to Katharina Bart at [email protected]

http://online.wsj.com/article/SB121005102870870129.html?mod=hps_us_whats_news

Headline by John Donovan of www.royaldutchshellplc.com

Quote from recent Wall Street Journal article:

It’s hard to make a case to someone wealthy that you can manage their money well when you’ve just lost $37 billion yourself, said Dirk Hoffmann-Becking, an analyst at Bernstein Research in London.

Chaos and $37 billion meltdown at crisis hit USB bank where Royal Dutch Shell CFO Peter Voser is a director

Quote from recent Financial Times article:

HSH Nordbank says alleged “fraudulent acts and wilful breaches of duty” by UBS led to a $275m fall in the value of a portfolio of credit derivatives sold to it and managed by the Swiss bank, according to a lawsuit filed in the US.

Financial Times: HSH lawsuit claims UBS ‘acted fraudulently’ (*Shell CFO Peter Voser is a director of UBS)

Comment by John Donovan of www.royaldutchshellplc.com:

The involvement of Peter Voser in the financial crisis at USB does not bode well for any ambition on his part to become CEO of Royal Dutch Shell Plc when Jeroen van der Veer retires in June next year.

Comment by John Donovan in another recent article:

“*ROYAL DUTCH SHELL CHIEF FINANCIAL OFFICER PETER VOSER HAS BEEN A DIRECTOR SINCE APRIL 2005 OF THIS SCANDAL HIT BANK WHICH IS IN A DEEP FINANCIAL CRISIS: HE IS A MEMBER OF THE UBS BOARD FACING MOUNTING CRITICISM OVER FAILURE TO IDENTITY HUGE EXPOSURE AND ITS SUBSEQUENT MISHANDLING OF THE CRISIS”

FT: Ospel to leave UBS after latest $19bn writedown: mounting criticism over.. boards failure to identify huge exposure and subsequent handling of the crisis

FT comment in same article:

Mr Ospel, who has faced mounting criticism over his and the boards failure to identify thebanks huge exposure and its subsequent handling of the crisis, will be replaced by Peter Kurer, UBS’s general counsel.

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