UBS says their first big board meeting in Singapore after the rogue trading scandal will be a “normal meeting.”Nonsense! It’s certain to be a game-changer no matter what happens.
UBS CEO Oswald Gruebel has plans to make a big announcement about the firm’s investment bank on November 17.
So everyone is watching to see what comes out of the boarding meeting, which starts on Wednesday and lasts for 3 days in Singapore.
What isn’t happening:
- Gruebel, in a separate town hall-style meeting with employees on Tuesday, ruled out a sale of the bank’s investment banking division, Dow Jones Newswires reported, quoting sources, according to the AP
There’s been some speculation that Gruebel will announce a big overhaul of UBS’ investment banking division on November 17th. Many think the UBS ibank will have to shrink or change dramatically given a number of challenges facing the unit. “Rogue trader” Kweku Adoboli’s alleged $2.3 billion loss is just one challenge (here are some more – and as of yesterday, we can probably add upcoming poor fixed income trading revenues to that list).
Now, the meeting wasn’t called for the purpose of deciding what do about the ibank after the rogue trading scandal – it is one of the four held every year and strategic changes to the investment bank are on the agenda, according to Reuters.
However everyone’s expecting a few big discussion topics to be on the table:
- Swiss media reports said Gruebel is expected to seek a vote of confidence during the meeting, according to the AP.
- Possible management changes. CRO Maureen Miskovic’s, Gruebel’s, and ibank head Carsten Kengeter’s jobs might be on the line after the rogue trading scandal caused confidence in UBS’ risk management to drop. (Gruebel is confident- He laughed when asked by Reuters at his hotel on Wednesday if he still had the board’s backing and said, “Yes. Always.”)
- A scale back in proprietary trading and fixed income
- A scale down, ring-fence or even split to separate its risky investment banking business from its core wealth management unit in order to shield private clients.
- 50-75% reduction in the i-bank, based on how much of the ibank Gruebel said was necessary in order to support the wealth management business at the 2nd quarter earnings conference. (See here.)
One thing that everyone seems certain of is that the one unit that still looks good at UBS is Bob McCann’s wealth management division. Here’s what one broker, Collins Stewart predicts the effects will be, according to Reuters. “Our near-term concern is the impact the recent turmoil will have on customer confidence in Wealth Management, which had been staging a gradual recovery in recent quarters.”
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