SWITZERLAND - Joseph Scoby, chief risk officer at UBS, is going back to his former position as head of alternative and quantitative investments - a division which has contributed to major losses at UBS' global asset management arm.
Scoby took up the position of CRO in October last year, replacing Walter Stürzinger who took the role of chief operating officer.
Philip Lofts, currently deputy CRO and UBS employee for 20 years, will take over from Scoby who, according to UBS, "had always planned to return" to the investment side.
The latest developments were announced at the same time as John Cryan, chief financial officer, announced a 30% decline in pre-tax profits compared with the second quarter, to CHF248m (€166.7m) in the bank's global asset management division which, according to him, is mainly down to "lower performance fees from the alternative and quantitative investment business".
Global asset management saw outflows of CHF34.4bn in the three months to the end of September 2008.
At least CHF21bn of the outflows were from institutional clients, almost CHF5bn of which was in money markets assets, "some in real estate and the rest roughly evenly distributed between equity, multi-assets, alternatives and fixed income", Cryan noted today during a web briefing to analysts on the third quarter results.
He claimed the outflows were mainly down to investors wanting to diversify assets into different financial institutions.
"Since the Lehman collapse there is a heightened awareness among investors of the counterparty risk and corporate mortality - that a company can go under. [Investors] react defensively and spread their assets between several financial institutions. If you are the big guy in the market arithmetically you come off worse than the smaller one."
UBS identified bad performance of investments as another cause of the outflows but Cryan noted there have been "significant improvements" in investments, particularly equities, since the second quarter.
The bank has announced a further 3,000 jobs will be cut - two-thirds of these will be chopped from the investment bank - having already having cut their employee numbers by 1,900 over the last months.
"There has been some ‘active management' - if I may use this euphemism - of the client advisory base," Cryan said.
The overall group net profit attributable to UBS shareholders for the third quarter is CHF296m, in line with the pre-announcement made in mid-October, the bank noted in a statement.
"The overall result is not satisfactory but an improvement to the last quarter," the CFO pointed out.
Combined asset outflows from all divisions of UBS amounted to CHF83.7bn in the third quarter, leaving the asset management division with CHF708bn in assets under management and the group with total assets under management of CHF2.64trn.
An EGM will be held on November 27 at which further details on changes to the bank's compensation structures will be revealed as well as on the impact of two deals signed with federal Swiss authorities on selling off risk assets and increasing capital. (See earlier IPE story: UBS spins off riskier assets)