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Swiss bank UBS AG, whose massive trading losses in the past year fuelled calls for shedding the investment bank business, has no plans to shed the operation, its investment banking head said in an interview on October 04.
"UBS is committed to not selling the investment bank," UBS Investment Bank Chief Executive Jerker Johansson told Reuters, hours after UBS announced plans to cut 2,000 jobs and shut down several commodities businesses. "But we are committed to an investment bank that has more autonomy and also more accountability."
Johansson believes the recent turmoil on Wall Street proves that unified commercial and investment banks are the best way to weather stormy markets.
At the same time, UBS wants to ensure that the investment banking division does not make the kind of management and trading mistakes that generated more than $42 billion in write-downs, Johansson told Reuters.
Johansson joined UBS from Morgan Stanley earlier this year to help turn around a division that built up massive exposure to subprime mortgages, CDOs and other assets just as financial markets started to freeze up last year.
The resulting write-offs dragged down the rest of the group and hurt the reputation of the world's largest private wealth manager. Investors demanded UBS split off the investment bank and refocus on money management, a steady and lucrative business. In recent weeks, all of UBS's rivals have been swept up in the worsening storm.
Lehman Brothers Holdings Inc collapsed into bankruptcy protection, while Merrill Lynch & Co Inc quickly agreed to be bought by Bank of America Corp. The decline of Wall Street investment banks prompted Goldman Sachs Group Inc and Morgan Stanley to change their business models and lay out plans to build out deposit-taking banks. Suddenly the securities industry looks like J. P Morgan Chase & Co, Citigroup Inc and UBS. "I believe the benefits of being a group, especially in these turbulent markets, are substantial," Johansson said.

Copyright Reuters, 2008

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