UBS taps private equity chief to boost deals

NEW YORK, Mon Apr 23, 2012 – UBS AG, the Swiss bank that this month suffered the departure of some of its most senior dealmakers in the U.S., said on Monday it hired the former head of Bank of America Corp’s. buyout arm to bolster its deals coverage.

UBS said in an internal memo that Jim Forbes, a veteran banker who has raised over $100 billion in financing for companies and advised on over $120 billion of merger and acquisition deals, would join the bank on Monday as vice chairman at UBS Group Americas.

The appointment comes as UBS tries to restore the faith of both its clients and staff in its investment banking prowess. Last week it saw its head of investment banking for the Americas and its co-head of U.S. mergers and acquisitions resign in quick succession.

Forbes will spend most of his time in his new job calling on key clients in healthcare and financial sponsors as well as broadly supporting deal coverage teams, UBS said. He will report to Bob McCann, CEO of UBS Group Americas, and Brian Hull, vice chairman of Wealth Management Americas.

Forbes was most recently head of the global principal investments group at Bank of America, which is being wound down as banks scale back private equity investments due to new regulatory requirements and increased competition.

Top Merrill dealmaker Orcel to join UBS: sources

NEW YORK, Thu Mar 22, 2012 – Andrea Orcel, Bank of America Merrill Lynch’s top adviser in Europe and architect of many of the region’s biggest banking deals including the break-up of ABN Amro, is leaving to join UBS, three people familiar with the matter said.

Orcel will become joint head of UBS’s investment bank, alongside Carsten Kengeter, a role that will re-unite him with UBS chief executive Sergio Ermotti, the former Merrill Lynch banker who took over from Oswald Gruebel late last year.

The departure is a blow for Bank of America, under pressure to fix its flagging performance, but a coup for the Swiss bank that is fighting to restore its fortunes after a debilitating $2 billion trading scandal.

Fluent in four European languages and in his late 40s, Orcel is a 20-year Merrill Lynch veteran and the banker of choice for clients like Santander and Unicredit, according to bankers at other firms.

At the height of the crisis in 2008, Merrill Lynch paid him close to $34 million in stock and cash for his services.

UBS’s new CEO commits to keeping U.S. brokerage; no plans to sell

NEW YORK ― UBS AG’s top two executives reassured the company’s U.S. brokers and advisers Monday that the embattled Swiss banking giant has no plans to sell UBS Wealth Management Americas.

“Again: this business is not for sale,” UBS Chairman Kasper Villiger and interim CEO Sergio Ermotti wrote in an internal memo. Ermotti was installed as CEO over the weekend after the sudden departure of group chief executive Oswald Gruebel, a strong backer of the U.S. business.

Villiger and Ermotti also affirmed their support for the Wealth Management Americas CEO Robert McCann, a former Merrill Lynch executive hired two years ago to lead the U.S. unit’s turnaround.

“UBS is committed to further developing our franchise in this important wealth market under Bob’s leadership,” Villiger and Ermotti wrote. A successful U.S. wealth management business is “essential” to the bank’s strategy, they said.

Gruebel’s resignation after a $2.3 billion trading loss from an alleged rogue trader adds to a drumbeat of disturbing headlines over the past three years that has undermined confidence among U.S. clients and financial advisers, some advisers and headhunters said.

The rogue trading incident uncovered by the bank two weeks ago undermined two years of efforts by Gruebel, a former Credit Suisse executive, to staunch billions of dollars of trading losses that eroded confidence in the parent bank during the 2008 financial crisis.

In the United States, the latest scandal is putting brokers once again on the defensive in fending off questions from wealthy clients. UBS employed almost 6,900 financial advisers at the end of the second quarter, less than half the total of industry leader Morgan Stanley.

“A lot of the advisers have been telling us that this negative press was really hard to spin,” said Mindy Diamond, a headhunter at Diamond Consultants in Chester, New Jersey, who has hired brokers away from UBS. “There are a lot of very frustrated UBS advisers.”

Rick Peterson, a recruiter in Houston who seeks to hire out of UBS, said the sense of instability among the firm’s advisers is growing.

“Every time you hear, ‘UBS loses a pile of money’ or ‘UBS is in trouble with the U.S. government,’ it means UBS is in trouble with their clients,” he said.

The trading loss and Gruebel’s departure also has breathed new life into a long-standing rumor that UBS would divest or spin off its U.S. brokerage arm, which is not as profitable as the Swiss company’s private banking businesses.

McCann’s brokerage operation pays advisers a percentage of fees and commissions, which often results in higher payouts than the salaries and bonuses received by private bankers. A broker’s clients also can be more loyal to a broker than to the parent bank, while private banking has the reverse dynamic.

UBS earlier this year was rumored to be talking about selling the U.S. brokerage to Wells Fargo & Co. big U.S. bank that has been expanding its brokerage arm. A few years ago, HSBC Holdings PLC was the purported suitor.

Wells, HSBC and UBS declined at the times to comment on the speculation.

Before he joined the firm, McCann himself was part of a group that approached Gruebel to buy the U.S. operation, and rumors of a management buyout has resurfaced recently. UBS said the rumor was “categorically untrue.”

Research analyst Richard Bove of Rochdale Securities said UBS executives in Switzerland have good reason to hold onto the U.S. business as they struggle to build capital and restructure their investment bank.

“The U.S. brokerage is not capital intensive and it throws off cash,” Bove said.

UBS executives on Monday, nevertheless, took pains to combat rumors within the bank that with Gruebel gone the emphasis should turn to private banking.

Robert Mulholland, the No. 2 executive at UBS Wealth Management Americas, reinforced Villiger and Ermotti’s message in a conference call with regional and branch managers Monday morning.

“We are not for sale,” he said, according to a UBS employee who listened to the call. “It was the board’s decision not to sell, not just Ossie’s.”

The impact of Gruebel’s departure, he added, is “in a word, nothing.”

However, some advisers indicated that the latest scandal may be the last straw following a tax scandal in which UBS reached a $780 million settlement with the U.S. government over helping U.S. clients avoid paying almost $20 billion of taxes by setting up offshore accounts. The bank also agreed to turn over the name of 4,450 clients that U.S. officials suspect of tax evasion.

In the year before McCann arrived near the end of 2009, nearly a third of top advisers bolted and client assets plunged by about $119 billion. McCann had been reversing that trend prior to the latest trading scandal.

Now the tough conversations have returned.

“I had a client ask me, ‘How can I trust you to manage my money, if you can’t manage yours,” said a veteran UBS broker, who asked not to be named. “There’s a serious lack of confidence in the firm. There’s constant surprises.”

UBS wins review of Madoff trustee’s $2.6 billion suits

NEW YORK ― UBS AG won review by a Manhattan federal judge of $2.6 billion of lawsuits brought by the trustee liquidating Bernard Madoff’s firm, at least the fourth time a bank has obtained access to that court.

U.S. District Judge Colleen McMahon agreed to accept the two UBS lawsuits, which accused the Swiss bank and various “feeder funds” that steered money to Madoff of profiting from and covering up his Ponzi scheme.

Her decision is a setback to the trustee, Irving Picard, who has filed roughly 1,050 lawsuits seeking more than $103 billion for Madoff’s victims, and has been trying to pursue his cases in bankruptcy court.

But banks and some other targets of Picard’s lawsuits have said the trustee is raising issues that cannot be addressed by a bankruptcy judge, and should be handled in a federal district court, a higher tribunal. District courts also allow for trial by jury, while a bankruptcy court does not.

A spokeswoman for Picard did not immediately return a request for comment.

McMahon has also agreed to handle Picard’s $19.9 billion lawsuit against JPMorgan Chase & Co.

Another federal judge, Jed Rakoff, is considering whether Picard can invoke racketeering law in a $58.8 billion lawsuit against Italy’s UniCredit SpA, Austria’s Bank Medici AG and its founder Sonja Kohn, and other defendants.

Rakoff is also reviewing some issues in Picard’s $9 billion lawsuit against HSBC Holdings Plc, as well as his $1 billion lawsuit against Fred Wilpon and Saul Katz, owners of the New York Mets baseball team.

UBS had in a June 21 court filing questioned Picard’s standing to raise some claims, and said his common law claims were preempted under a 1998 federal law concerning class-action lawsuits, the Securities Litigation Uniform Standards Act.