One common criticism I hear on the street is UBS, the U’ve Been Sacked bank, or Ultra Bulls**it S**t bank has a poor reputation. Either through routinely failing institutional clients by wiring money incorrectly to a counter-party while they’re in the middle of a lawsuit. Or finding their contracts don’t mean very much when the words ‘capped-fees’ is just there to charm, it’s misnomer in Swiss-German that means it’s uncapped; a kind of screw you get out clause.
But the bank is also known for the billions they’ve put into R&D in dark pools, brokerage, the sheer numbers of starts-up in their rather activist, but also interesting, long-term investment strategy.
Yet this strategy is where it’s gone all wrong. Now whenever I read of a change of tack by the bank, saying they’re going revamp ‘back to Warburg & Co.’s roots’, or propaganda citing a CEO who believes it can return to the status of a ‘classic private bank,’ I wonder about the sanity of the world (and the Financial Times).
Monkeys on this forum have lamented UBS’ failed attempt in having the largest investment bank in the world, going on to castigate them more for every failure, fingering the blame on their poor governance, rather poisonous brand-name, or any other tid-bit that seems to get the fuzz-box in a financial blogger’s blood flowing.
Yet the problem is this: UBS’ investment bank was the largest in the world. When it bought Warburg & Co., after of course Siegmund Warburg the perennial founder had already conked out , the problem has only become apparent that with his non-existent advice came an impossible ordeal to integrate the seething mass of different, conflicting entities, into one integrated unit; what came was a rearrangement reminiscent of a bad modern art fresco containing monopoly pieces, all trying unsuccessfully to fit into the brasses’ wider, warped goals.
So goes the story…
UBS bought the largest stockbroker in America, Paine Webber.
One of the largest asset management firms, Brinson Partners.
One of the largest American investment banks, Dillion, Read & Co.
One of the largest market makers in the world was bought, O’Connor & Associates.
One of the largest non-Swiss banks in Europe, Schröder, Münchmeyer, Hengst & Co.
But UBS’ insatiable appetite for non-stop buying sprees, in contrast, was entirely a blessing in disguise. It was lucky that’s it’s has the cumbersome constitution of a sloth in its litany of large acquisition throughout the 2000s. Precisely because without the good management of Old Warburg & Co’s balance sheet, it could never buy too much or too quickly, or else they would have sunk their own battleship.
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