MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Posts Tagged ‘ubs’

Why Oswald Gruebel Should Shut Up

Thursday, April 28th, 2011

The Swiss government is planning new, much stricter regulation for UBS and Credit Suisse (the two “too big to fail” banks in Switzerland). Oswald Gruebel, CEO of UBS, is not amused. While Brady Dougan, the CEO of Credit Suisse is applauding the new regulation, the UBS is implicitly threatening to move out of the country.

So, what is at stake? The Wall Street Journal spells it out clearly:

“Strict by international comparison, the draft law goes beyond the Basel III rules on bank capital. It would require UBS and Credit Suisse to hold at least 19% of risk-weighted assets in total capital, of which 10% would be common equity. By contrast, the Basel III regulations call for just 10.5% in total capital and 7% in common equity.”

The UBS is worried about this competitive disadvantage looking at rivals like Deutsche Bank or Goldman Sachs. In some areas, notably in investment banking, more equity has to be ponied up for risky business which put cost pressure on the bank as equity is expensive. However, these new rules will help the Swiss Banks to regain part of their reputation that has been tainted in the last financial crisis. Especially the UBS has detstroyed billions upon billions through risky subprime deals. In the end only the Swiss government, and ultimately the tax payer, has saved UBS from going the Lehman way. UBS should be grateful that this new law will make clear to the whole world how safe Swiss banks are. A priceless competitive advantage, especially for the wealth management division. At the very least, Oswald Gruebel should stop complaining and threatening the Swiss government who has saved his bank only two years ago.


“It will never be about you and us…

Tuesday, August 24th, 2010

…It will always be about your money” . Private bank Hyposwiss is running an advertisement making fun of the UBS claim “You and Us” . Unfortunately, UBS has just changed the ad claim to “We Will Not Rest” making the Hyposwiss joke look a bit yesterday…


UBS Jumps On Gold Rush Bandwagon

Tuesday, June 29th, 2010

In its latest “Investor’s Guide” (only in print)  UBS  pushes heavily the case for gold. In an interview Dirk Faltin, head thematic research at UBS, says:

“Compared to stocks or oil gold is according to our calculations somewhat cheap, at least not extremely expensive… Gold has maintained its value for over 750 years. Naturally the gold price fluctuates, even substantially… But gold offers some protection against inflation.”

As opposed to UBS we have no particular opinion on the future price of gold. But what we know is that, in real terms, gold has had almost no positive return for investors.

Here are the data (from: The Buy and Hold Bible (in German), Prof. Jeremy Siegel comes to the same conclusion):

Average Annual Return of Gold (after inflation)

1889-1908: -0.4%
19909-1928: -3.2%
1929-1948: 1.9%
1949-1968: -1.4%
1969-1988: 6.9%
1989-2008: 0.8%

Compared to other asset classes the picture for gold is bleak (source: J. Siegel):

Gold compared to other asset classes

Even short-term government bonds would have returned more than gold. What sense does it make to recommend gold as its price hase been increasing so much over the last few years? This has probably more to do with all those gold etfs, gold certificates and other structured gold products UBS and many other wealth managers want to push down their clients’ throats than with a sensible investment strategy. Please read also the excellent interview with Rick Bookstaber on The Gold Bubble.


How Not to Waste Tax-Payer’s Money

Friday, August 21st, 2009

The Swiss government made an annualized profit of about 30% on its emergency investment to stabilize the UBS. The total amount is approximately Swiss Francs 1.2 bn. That’s what I call a cool investment. The government has taken advantage of the swift restructuring of the UBS and of its global business model which is believed to make a succesful return.

Yet, I am wondering whether the UK, US, German and other governments will also pocket such a handy profit on the billions they have pumped into ailing financial institutions? I doubt it because, as opposed to the pragmatic Swiss government, most other governments have supported a great many institutions which are a lot less healthy than the UBS and also unwilling to change their outdated structures and business strategies. Many of these state-run zombie financial institutions still have bad management, unclear business models and a less than certain future. One particularly good example are the German Landesbanken. Those banks have a de facto government guarantee for their capital. Yet, what have they done with all that cheap money? Yes, you guessed right - a great many bad investments. Now you would expect that these banks are restructured, sold, merged - whatever is necessary to make them profitable. But the politicians keep them alive because they need them to finance all their election pork and petty projects. No way the tax payer will ever see its money coming back…