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UBS goes back to basics
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January 25, 1999: 4:49 a.m. ET
Swiss bank to reign in Warburg Dillon Read at cost of lower profits
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LONDON (CNNfn) - Following a tough 1998, UBS, Europe's largest bank, Monday is set to unveil to investors a new strategy for growth.
But UBS warned that reigning in the activities of its troubled Warburg Dillon Read unit would set back group profit targets for 2002 from 50 francs a share to 45 francs ($33) a share.
UBS shares slipped 11 francs, or about 2.5 percent to 420 in early trading Zurich.
However, the bank said that because of the emphasis on internal growth and core businesses, substantial amounts of equity may be freed up. So the bank will look to consider buying back some shares, although it has no formal plans to do so.
At an "Investors' Day" taking place at its Zurich headquarters, UBS says it plans to focus expansion in the coming years chiefly on its investment and asset management businesses. A key initiative will be the "aggressive expansion" of domestic private banking in core European markets, the bank said.
UBS says will also look to make selected acquisitions.
For the third quarter of 1998, UBS profits fell 911 million francs. Warburg Dillon Read had a a 1.23 billion franc loss over nine months. Write-offs from exposure to the LTCM hedge fund debacle cost 790 million francs.
Despite some reports it may consider a disposal of the business, UBS says it remains committed to the investment bank. "Warburg Dillon Read will continue to play a key role in supporting the group's European asset gathering strategy while further strengthening its global bulge bracket status," the bank said.
But in a clear nod to the recent problems, UBS says that the investment bank division's risk exposure, which has been cut by 50 percent, will be closely monitored and further reduced. 
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UBS
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