(13 May 2008 – Australia) UBS, the largest investment bank in Australia has confirmed that there are no intentions to sell the Australian division, although job cuts will occur.Head of UBS’s investment banking department, Alex Wilmot-Sitwell, said that UBS is a global business and Australia is a core component of the franchise, so there was no sense in considering a sale.
The investment bank will also not spin-off its global investment bank division, despite speculation following US$38 billion (A$40 billion) in write-downs, executive departures and a wide-ranging restructure.
Mr Wilmot-Sitwell, told ‘The Australian’ newspaper that 2600 jobs would be lost because the bank had to restructure the way the business was funded.
This amount is more than half the 5500 previously reported to be cut from operations in total, announced in order to recover costs and restructure to deal with the losses incurred due to the credit crisis.
Wilmot-Sitwell said that the strategy of UBS was for the investment bank to remain a core part of UBS. He said that there is absolutely nothing wrong with the UBS strategy or business mix, and that better execution was simply required.
He also said that previously UBS had a strategy that was flawed and the bank didn’t set the bar high enough in terms of adequate returns on capital.
The investment bank now has a new funding model whereby they have to pay a market cost of funding. The way of managing risk return has got to change, he explained.