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Wednesday, 11 March 2009

RBS / UBS, what's in a name?

When you have been to a good party, or even a bad one, it is always polite to write and thank your hosts, so here is an example from the UBS Annual Report (see p. 2) thanking their shareholders for their SwFr 21 billion blow out in 2008 (or should that be blow in?).

Some points to note (quoted in bold):

  1. Clients have, understandably, expressed to us their disappointment about our losses, while at the same time stressing their appreciation for the advice and service levels they receive from their advisors,

    which just shows what a kind and understanding nation the Swiss are. Although some of their clients may not have banked on getting all of their cash back anyway, because hot money has certain "costs".

  2. With hindsight, it is clear that UBS was not prepared for this. Our balance sheet was too large and the systems of risk control and risk management that should have limited our exposure failed.

    We can only be thankful that they have a newly established Chief Risk Officer position.

  3. They will have a new compensation model for senior executives that aligns compensation with the creation of sustainable results for shareholders,

    which is a shame for any shareholders who thought that this was already in place. Apparently not. The current system is based on a method of bounty division previously endorsed by Caribbean pirates.

  4. Also in 2009, UBS settled a US cross-border case with the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) by entering into a Deferred Prosecution Agreement (DPA) with the DOJ and a Consent Order with the SEC.

    So there you have it. Not only was the bank engaged in criminal activities, they still managed to book a net loss of SwFr 20 billion. Clearly, crime does not pay.

  5. Outlook — The recent worsening of financial conditions and UBS-specific factors have adversely affected our results, particularly in the Investment Bank. Even after substantial risk reduction, our balance sheet remains exposed to illiquid and volatile markets and our earnings will therefore remain at risk for some time to come.

    Sell. Sell! SELL! AND KEEP SELLING!!!

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