Beleaguered Swiss bank UBS is considering the sale of Paine Webber, the heart of its US wealth management business, Reuters reports.
UBS is under pressure from the Swiss financial watchdog and from one of its top shareholders, Olivant, to overhaul its business after more than $37 billion (18 billion) in writedowns during the credit turmoil.
The bank’s management, led by Chief Executive Marcel Rohner, is also grappling with the US trial of a former employee for helping a billionaire client hide $200 million.
Considering a sale of Paine Webber, the broker it bought nearly eight years ago for about $10 billion as a bridgehead into North America, is part of a review which is due to be concluded by October.
“If you are going to be a global wealth manager, then the US is a market where you have to be present,” says one of the sources to Reuters. “But it is also the case that you have to make it more profitable. (A sale) is always an option.”
When Wachovia bought broker A.G. Edwards for $6.4 billion last year, it paid roughly $1 million per broker. A similar valuation for Paine Webber would value it at more than $8 billion.
UBS’s US wealth management business, which employs more than 8,200 brokers, made just 183 million Swiss francs (90 million) pretax profit in the first three months of this year. It suffers from higher costs and thinner margins than the lucrative Swiss business.
UBS is being helped in this review by investment bank Lazard, whose chief Bruce Wasserstein also advised it on its acquisition of Paine Webber in 2000.