Clock ticking at UBS for turnaround wizard Gruebel

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borei's picture
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http://www.reuters.com/article/swissMktRpt/idUSLD73344220091113?sp=true

* UBS seen unveiling targets at investor day on Nov. 17

* Investors hope for clear roadmap to recovery

* Turning around UBS to take time

* Slowing down outflows key to investor confidence

* Madoff-related litigation still looming

By Lisa Jucca, European Wealth Management Correspondent

ZURICH, Nov 13 (Reuters) - Turnaround wizard Oswald Gruebel must prove to investors he has not lost his magic by clearly mapping out UBS's (UBSN.VX)(UBS.N) road to recovery at a key investor event next week.

UBS is expected to unveil business targets, and investor expectations for the no-nonsense Gruebel to finally turn around the battered Swiss banking flagship are high after his previous successful effort at arch-rival Credit Suisse (CSGN.VX).

But nine months into the job, UBS's bottom line is still in the red and the bank has yet to restore its reputation after a tax fraud investigation in the United States and making big writedowns on risky bets.

"It's not easy to turn this bank around and there are still challenges ahead. Gruebel's turnaround of Credit Suisse started in 2002 and it did not come in a couple of months. Why should it come any quicker at UBS?," said Dirk Hoffmann-Becking, analyst at Stanford C. Bernstein.

Higher-than expected accounting charges pushed UBS to its fourth consecutive quarterly loss in the third quarter. The bank said last week it did not expect to win back client money soon. [ID:nL2713325]

Its problems are borne out by a lacklustre share performance -- up 17 percent this year while the wider European sector .SX7P has gained nearly 60 percent and Credit Suisse's stock has doubled in value. Although UBS's investment bank -- which caused much of its problems in the subprime crisis -- was profitable at an underlying level, Chief Financial Officer John Cryan acknowledged that all investors wanted to see was a positive headline number.

"I believe UBS will try to present some good news on its investment bank and wealth management business," said Vanni Vecchini, an equity sales specialist at global independent agency broker Louis Capital Markets.

"Most investors are sceptical on UBS's turnaround. What they really want to see is a first sign of a slowdown of net new money outflows."

TIME WAITS FOR NO-ONE

The husky-voiced Gruebel, born in Germany in 1943, earned a legendary reputation in Switzerland after restoring confidence and profitability at the then weakened Credit Suisse during his 2002-2007 tenure.

But the banking veteran, a former trader with no university education, took on his toughest challenge yet when he agreed to come out of retirement to steer UBS through a subprime and tax storm.

"UBS has made all the mistakes they could. Obviously Gruebel is trying to turn it around. The guy is very good, but he has inherited a lot of problems," said Daniel Zachmann, analyst at independent asset and wealth manager Bedrock Group.

Even though Gruebel has put the bitter U.S. tax litigation behind him with a settlement in August that included a pledge to reveal the names of around 4,450 wealthy U.S. clients, UBS is still losing client money at its core wealth management franchise.

"Although we believe in UBS's longer-term value proposition, ...the path to recovery is unlikely to be a straight line," said Citi bank analyst Kinner Lakhani. "The investor day clearly offers management the opportunity to better define the roadmap."

The Swiss government will hold a press conference on Tuesday outlining the criteria for transfer of UBS client data to U.S. tax authorities.

UBS is also still facing litigation after it helped set up, at the request of clients, two Luxembourg-based funds that invested assets with convicted U.S. fraudster Bernard Madoff. The funds faced total losses of $1.7 billion at end September, UBS said in its financial report.

The investor day opening session, to be led by Gruebel's right-hand man and former Credit Suisse colleague Ulrich Koerner, will tackle the issue of "Group Strategy and Transformation"

More detailed sessions on the investment bank and wealth management business will follow.

Investors expecting fireworks at next week's presentation may be disappointed as some analysts predict Gruebel will stick to the cautious tome he has adopted since he came into office.

"There are a lot of investors that are expecting some sort of Big Bang at the investor day, big earnings targets they can look forward to," said Stefan Stalmann, analyst at UniCredit. "But I think Gruebel is quite happy to run strategically with what he has. I expect no revolution."

amfUBS's picture
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"Send in the clowns."

borei's picture
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They did, a thundering herd of them.

UBScrewed's picture
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VEE VILL STOP DA BLEEDING!!!  YES VEE CAN! YES VEE CAN!!  YES VEE CAN!!

borei's picture
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McCann can, yes he Cann,
He's our Mann, yes we Cann.

McCann!

NOVA's picture
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Let's give them a grace period - six weeks maybe, something reasonably fair.  After that we call them the Thundering Turd.  Pretty immature but kind of funny.

LogansRun's picture
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As much as you longed to have the European Bank compensation model here (You and Us -us the firm) - you can't institutionalize your American advisors or your clients now given the reputational issues. Sympathy to the many who are there who run honest businesses at this firm and have to deal with the poor leaders and wirehouse mantra of why being the world's largest wealth manager, blah, blah, blah... Your model has failed and the gig is up now. Time to regroup. McCann may be able to recruit and swear he's turning the ship around. Believe him at your own peril. You need a new slogan. A new model. A new parent. An acceptance that this is America and not Switzerland. You used your global model to swoop in and garner the wealthiest clients and send them off to your Swiss Advisors. No loyalty to your US advisor at all. Let's face it, you hoped to get clients to do business with the firm and eventually alter the comp. plan. You do not respect your advisors. But, maybe you'll get that this is America and will now submit to the real model - You (the client) and the trusted advisor. Anyone counting on a new leader at these firms to save them is really missing the boat. No institution is best for any client. Too big to deliver.    

Good luck.

trade's picture
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when is the next set of branch broker and staff cuts coming?

UBScrewed's picture
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This may be the best post ever describing the UBS saga in the U.S.... GOOD JOB 

UBScrewed's picture
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LogansRun wrote:As much as you longed to have the European Bank compensation model here (You and Us -us the firm) - you can't institutionalize your American advisors or your clients now given the reputational issues. Sympathy to the many who are there who run honest businesses at this firm and have to deal with the poor leaders and wirehouse mantra of why being the world's largest wealth manager, blah, blah, blah... Your model has failed and the gig is up now. Time to regroup. McCann may be able to recruit and swear he's turning the ship around. Believe him at your own peril. You need a new slogan. A new model. A new parent. An acceptance that this is America and not Switzerland. You used your global model to swoop in and garner the wealthiest clients and send them off to your Swiss Advisors. No loyalty to your US advisor at all. Let's face it, you hoped to get clients to do business with the firm and eventually alter the comp. plan. You do not respect your advisors. But, maybe you'll get that this is America and will now submit to the real model - You (the client) and the trusted advisor. Anyone counting on a new leader at these firms to save them is really missing the boat. No institution is best for any client. Too big to deliver.    

Good luck.

borei's picture
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trade wrote: when is the next set of branch broker and staff cuts coming?

Another Stifel round is rumored, complexing just started, any time now.

amfUBS's picture
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I agree with UBScrewed, kudos to LogansRun for a great summation of the pathetic situation at UBS. The US brokerage has been no better than a pawn as the Swiss bank skims the cream to Switzerland. LR said they need a new model, a new strategy, a new parent. Can I also sugest a new name? I should probably start a new string as I stray off topic, but may I suggest dropping the UBS name and rebranding with "Das Boot". Something about a sinking German submarine seems very apropos.

LogansRun's picture
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UBScrewed wrote: This may be the best post ever describing the UBS saga in the U.S.... GOOD JOB 

UBScrewed, thanks if this was intended for this poster. The reality of the situation is saddening as I lived it and witnessed the ruining of a once pretty good firm. When I heard Marten state that the days of the FA attempting to be a stand alone without the strength of the RCC you could see the overt desire to take over the client relationship. The whole model is to get the FA to become reliant on the firm tools, a cross selling machine and expert PWA and RCC folks. The resources go to the FA's who embrace this model too and eventually these unknowing FA's are transferring the ownership of their books to an institution. Just like what Merrill/ BofA is doing now! Cross sell 'em multiple products, show we have a team of experts beyond OUR FAs, loan 'em money, and convince the FA population that we have the best model; other firms are worse... And no they don't pound you with the fund of the month, so you can run an objective book at these places if you don't mind the constant subtle emphasis on their tools to scale and seqment your book. Arrogance took them down and I have many friends there who are scared to leave or blind to the obvious desires of the higher ups. Or the poor saps who 'took a check' - better hope your boy McCann will sell the spin and sell you to get some restitution for your greed. Time to jump ship and move to the future. Public is very wary of these behemoth wanna be supermarkets. They have agendas to take your book and smile at you the whole time. Have seen much better attitudes towards FAs at other firms. It's really fun to see the whole agenda come unraveled. These big guys are just too big! The management is too far from the front lines and the layers of regional / divisional / coaches, etc... just clog the effeciency and drain the resources. The whole coaching thing is about FA retention. Some firms get that it's about the relationship between a client and their advisor and the firm's job is to improve that tie without mucking it up with all the bureacratic BS and non-compensable, firm concocted products.
Wouldn't it be great to see them get it right? To not be afraid of the power of a strong client/FA relationship and just friggin give the FA better tools and resources and fire all the corp. henchmen with their agendas?

If they can do this, maybe I'll go back!

right...not holding my breath.

Shania Twain's picture
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UBScrewed wrote: VEE VILL STOP DA BLEEDING!!!  YES VEE CAN! YES VEE CAN!!  YES VEE CAN!!

funny

The Oz-ster is a trip to listen to.   Sometimes so brutally honest its funny. You go like "did he just say that shti?"

"If vee do not foul-low the turnaround plan... then I am ah frad...the com pe nee will no longer ex sissed.   And then..of course...vee vill all be wit out jobs. Tank you.   
next quest ton?

I think thats how the screwed up that IRS crap.   They have this clueless honesty deal going on.

Why the hell would u open flood gates on that stuff?   especially when the Obama commies had NOTHING on you. You cant mess with another countries sovereign laws.

LogansRun's picture
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By the way, the attitude of the Swiss is that they are victims of the American regulators. They turned on the very US clients they convinced to explore tax havens. They despise the US Advisor compensation and dislike us. Just watch the web shareholder presentations. Socialist, elitist who thinkl they are above the US. If you are there still and not on a deal, this is a great time to bolt rather than await an improving reputation. They are weak now. If you are on a deal - hope they get their act together sooner than later! Brand names take time to salvage or maybe not...Arthur Andersen

Shania Twain's picture
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LogansRun wrote: By the way, the attitude of the Swiss is that they are victims of the American regulators. They turned on the very US clients they convinced to explore tax havens. They despise the US Advisor compensation and dislike us. Just watch the web shareholder presentations. Socialist, elitist who thinkl they are above the US. If you are there still and not on a deal, this is a great time to bolt rather than await an improving reputation. They are weak now. If you are on a deal - hope they get their act together sooner than later! Brand names take time to salvage or maybe not...Arthur Andersen

spot on    well put

Shania Twain's picture
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And they play that holier the thou BS. The reality is they been hiding money for Nazis, drug dealers, crooks, terriorest and candle stick makers for years

Try to dress it up as something else

LogansRun's picture
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That won't change Shania; This is their business. Hey, were't the swiss bank accounts designed for guys like 007 and the rest anyway? But aiding US citizens and then whining boo for getting busted is pathetic since they chased this biz, but these accounts have been around for yrs. These guys are global elitist and should pack it up here in the US. I truly feel for the FAs at this firm. Their firm is always the last firm to get it! I think FA's are unhappy at this firm, but also at Merrill and some others. Most FA's doing under $750K must be unhappy, but aren't some firms worse than others? I think between this one and Merrill it's a toss up. Other firms have thier issues too, but you must admit these two really have botched things. When firms f@&k up it's actually bad for all of us as the public sees all this stupid behaviour. It seems MSSB would be the fairest of the wires, but I don't know; what does everyone think? I hit the delete button on all the corp. wirehouse stuff, so now this is mere entertainment. Let's hope that our industry can gain a better image with the public and not become scapegoats for the lame leadership sins. The regulatory party is just getting started.

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