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UBS reshuffles top jobs
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March 12, 1999: 5:28 a.m. ET
Swiss giant switches execs to boost showing at Warburg Dillon Read unit
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LONDON (CNNfn) - UBS announced a major reshuffle of its senior management Friday after its investment banking operations posted heavy losses for 1998. The moves came after UBS announced lower-than-expected group net profit of 3.03 billion Swiss francs ($2.1 billion) in 1998.
The fallout from the problems at investment banking unit Warburg Dillon Read (WDR) will see the unit's chairman and chief Hans de Gier retire, while chief risk officer David Solo is relocating to the U.S. Chief financial officer Peter Wuffli will become chief executive of UBS Brinson, the group's asset management arm.
UBS shares dropped almost 2 percent to 484.5 francs in morning trading in Zurich. Analysts had been looking for profits of around 3.25 billion francs and the markets failed to react to hints of a share buyback program.
The reshuffle is the latest in a line following the departure of UBS chairman Mathis Cabiallavetta last October in the wake of a 950 million franc loss from hedge fund Long-Term Capital Management. UBS said de Gier will be succeeded by Markus Granziol, who heads UBS' equity business.
Solo is the highest profile casualty. The former Chicago derivatives whiz kid had been groomed as a successor for group chief executive Marcel Ospel and, as chief operating officer of SBC Warburg Dillon Read, was a leading member of the Swiss Bank executives who assumed control following the merger with Union Bank of Switzerland last year.
"The key questions are what happens to risk management and the chief financial officer - Solo's move is the most intriguing," said Bob Yates, Swiss banking analyst at Fox Pitt-Kelton. However, he added it was too soon to consign Solo to the UBS backwoods as no details of his proposed technology venture had been released.
Solo also led the integration efforts between SBC and UBS and as head of risk had been charged with plugging the losses made last year in emerging markets. He will leave the group executive board he joined last December and move to the U.S. to focus on building technology businesses.
The management reshuffle was announced after UBS revealed an operating profit of 4.07 billion francs for 1998 compared with 6.24 billion francs in 1997. Operating revenues slipped four percent to 22.8 billion francs while total assets slid 13 percent to 944 billion francs.
WDR was the only division to post a loss with private and corporate banking and asset management all moving ahead. The private banking business in particular has made rapid progress and UBS announced it will acquire Bank of America's private business in Europe and Asia for an undisclosed sum. 
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