Ubs AGUBS

Morningstar Rating

Stock Research and Analysis

by Erin Davis

UBS' reputation as an adept risk manager and a model of discreet private banking has been rocked by massive losses in the subprime crisis in the United States and legal scandals. UBS built its one-bank strategy around the idea that its investment banking Read more

Bulls Say

UBS' private bank is among the strongest in the world, and investors' memories are short. It should quickly recover from recent stumbles and regain its position as a top banker to the elite.

Despite the uproar over UBS' alleged role in helping U.S. investors evade taxes, the amount of money in question is less than 1% of UBS' total assets under management.

UBS is well on the road to recovery, having installed a new chairman and CEO and cleared the way for a more independent board of directors.

Switzerland's bank rescue plan removed $39 billion of risky assets from UBS' balance sheet, giving the firm a clean slate from which to prove that its underlying operations remain strong. Read more

Bears Say

Switzerland's recent moves to loosen bank secrecy laws will further damage UBS' asset management business as it becomes less attractive to international clients.

UBS has said it is committed to its U.S. wealth movement but is rumored to have tried to sell it in 2008. UBS may never achieve the scale necessary in the U.S. to maximize this business' profitability.

UBS' one-bank strategy may be fundamentally flawed, as the damage done to its private bank by the implosion of its investment bank demonstrates. However, if UBS is forced to spin off its investment bank and loses the ability to cross-sell products, growth at its private bank may slow significantly.

UBS' reputation was damaged by charges that it marketed risky auction-rate securities as safe investments and put its own interests ahead of those of its customers. Read more

Strategy

Until the subprime crisis, UBS employed a one-bank strategy and emphasized cross-selling its investment banking and wealth-management products to its wealthy clients. In mid-2008, UBS announced that Read more

Management

UBS' executive suite has had a revolving door. Current chairman, Kaspar Villiger, was elected in April 2009 and is UBS' third chairman in just over a year. CEO Oswald Grubel, former CEO of Credit Suisse CS, was appointed in February and is the third Read more

Profile

UBS is one of Switzerland's two large banks, with CHF 1.5 trillion in total assets and CHF 2.3 trillion in assets under management as of Sept. 30, 2009. In 2006, it earned Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

How Dodge & Cox Looks at Financials
Watch more