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Ethos warms to 'positive' UBS moves, but S&P is hesitant

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  • Ethos warms to 'positive' UBS moves, but S&P is hesitant

SWITZERLAND - The Swiss Ethosfund has welcomed new appointments to the UBS board but ratings agency S&P is still questioning whether the Swiss-based firm can improve its position in the short-term.

UBS yesterday announced it will change some of its board members at the extraordinary general meeting scheduled for October. (See earlier IPE article: UBS moves for a three-way split)

"We see the nomination of the four new board members as a very positive move," a spokesman for Ethos told IPE.

"They will bring specific banking knowledge to the board - which was one of our demands."

Ethos - the foundation for sustainable development founded by two pension funds - and other shareholders criticised the bank earlier this year in the wake of huge sub-prime related losses and write-downs. (See earlier IPE article: UBS disposes of subprime-related embarrassment)

While changes to board may have regained some confidence with Ethos, the spokesman for Ethos said the organisation does not want to comment "as yet" on the re-structuring of UBS into three autonomous divisions, as officials believe "it is yet too unclear what will happen with UBS strategically".

While UBS' activity may win over shareholders in some respects, ratings agency Standard & Poor's said neither the CHF358m (€220.8m) losses attributable to shareholders for Q2 nor the restructuring on the company will affect the current rating and outlook AA-/Negative/A-1+.

"The ratings could be lowered if writedowns, earnings, and net new money do not improve in the second half of this year," Standard & Poor's said in a statement.

"A positive rating action, such as a return to a stable outlook, is not expected in the coming quarters as it would require a stronger and more consistent performance over a sustained period."

The rating agency also pointed out "net new money, a key indicator of client confidence in UBS, was weaker than we had expected".

"Net new money is an important metric for us, and further significant outflows could put pressure on the ratings even if earnings improve as expected. Looking forward, the second-quarter result confirms that UBS is on track to restore profitability."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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