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UBS sees CHF226bn in outflows

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  • UBS sees CHF226bn in outflows

GLOBAL - Net new money outflows from all of UBS' businesses amounted to CHF226bn (€150.6bn) in 2008 and CHF103bn of that was from asset management - though January has already led to inflows at the bank.

UBS today revealed it suffered outflows of CHF85.6bn in the fourth quarter of last year alone, with particularly heavy drains in October.

Outflows are said to lessened considerably over the final two months of 2008 and both the wealth management and the asset management division have now reported positive inflows again, albeit UBS did not want to disclose any detailed figures on the monthly movements.

"It is way too early to say the period of large outflows is completely over but if we look at various indicators there is a strong case that the measures taken in October have had a very positive impact on clients' trust," said Marcel Rohner, chief executive of UBS.

UBS had signed a deal with the Swiss National Bank (SNB) last autumn to remove some of the most risky assets from its balance sheet into a so-called stability fund. (See earlier IPE story: UBS spins off riskier assets)

As part of this, however, UBS now announced it will not spin off student loan ARS and securities insured by monoline insurers - companies insuring the interest behind bonds and other securitised debt vehicles - but the assets will instead be kept by UBS and reclassified as loans and receivables in its books.

The portfolio size of the stabilisation fund is thus reduced to $39.1bn (€30.6bn) from $60bn.

Rohner claimed UBS felt "safe enough" holding the government guaranteed papers which are part of the deal with SNB to maturity.

"We can solve this problem ourselves with this provision and do not need to burden the SNB fund," he explained.

The asset management division saw inflows go mainly into money market funds in Q4 worth CHF6bn, having earlier suffered outflows of CHF4.9bn in Q3.

And of the CHF27.6bn in outflows during that quarter, CHF16.7bn were attributed to institutional clients.

Invested assets for the whole group stood at CHF2.2trn by the end of 2008, CHF575bn of which were in global asset management, compared to CHF3.2trn and CHF891bnin 2007.

UBS therefore reported a negative net operating result of -CHF2.8bn for Q4 and a group net loss attributable to UBS shareholders of CHF19.7bn for the full-year.

The bank claimed in a statement this negative result was "due primarily to losses on risk positions in the investment bank".

UBS is said to have since restructured its investment banking division by selling off certain "non-core areas or such which were not projected to be profitable in the foreseeable future", said Rohner at a briefing today.

This included the bank's commodity business but excluding precious metals, as well as exotic derivatives.

UBS has laid off around 1,800 people within the last year, largely through "involuntary redundancies in the investment bank", said John Cryan, chief finance officer.

Jerker Johansson, chief executive of the investment banking division, added the headcount in his division will decline further form currently just over 17,000 to 15,000 by the end of the year, as UBS thinks "this is the right staffing level for the investment bank".

Elsewhere, Swiss bank Julius Baer has reported it generated a net profit of CHF852m in 2008, down quarter in value from 2007.

Assets under management declined by one-third to CHF 275bn, while net outflows from the asset management operation amounted to CHF27bn.

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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