Swiss bank walls off U.S. retail banking, emphasizes home-market businesses. Zurich-based UBS is cutting its wealth-management division in two. Instead of a global wealth-management unit taking in its mainly Swiss private-banking business along with its mainly U.S. retail-brokerage business, it's going with Wealth Management & Swiss Bank to house its Swiss, European and Asian private banking and its Swiss corporate banking, and Wealth Management Americas primarily as a repository for it U.S. wirehouse.

"The formation of the two new divisions will help to re-build our reputation and recognition," says UBS CEO Marcel Rohner. "Management will focus on [its] specific strategic challenges which, among others, are changes in client behavior, new market dynamics and a tight regulatory environment."

Rumors

Francesco Morra, former head of UBS' wealth-management business in Western Europe (ex Switzerland), the Mediterranean, the Middle East and Africa, and Juerg Zeltner former head of UBS' wealth-management business in northern, eastern and central Europe, have been named co-heads of Wealth Management & Swiss Bank; Marten Hoekstra -- who had assumed Raoul Weil's position as global head of UBS' wealth-management and business-banking segments in November 2008 after Weil stepped down following his indictment by a Florida grand jury for conspiring to defraud the U.S. government -- gives up his interim role but continues as head of the Swiss bank's wealth-management operations in the Western Hemisphere.

In practice, Morra will concentrate on UBS's Swiss business- and private-banking operations; Zeltner will focus on private banking in the non-Swiss Old World, and Hoekstra "will continue to focus on gaining scale and market share in the domestic US wealth management market as well as further developing the Canadian and Latin American markets," UBS says in a press release.

The lack of detail concerning UBS' U.S. retail-brokerage business is intriguing given recent rumors that the bank is in talks to sell or merge that business, which has about 7,800 brokers (including advisors acquired when UBS bought the retail brokerages of Piper Jaffray and KeyCorp in 2006) in nearly 500 branches. The Swiss bank recently put out feelers concerning a retail-brokerage joint venture -- perhaps along the lines of the proposed merger of Morgan Stanley's private-client division and Citigroup's Smith Barney -- with Wachovia Securities, according to a report in the new York Post. San Francisco-based Wells Fargo acquired Wachovia Securities, along with the rest of Charlotte, N.C.-based Wachovia, at the end of 2008.

The announcement came after UBS today posted a loss of $7.6 billion for its fourth quarter 2008 -- a good 30% worse than the analysts' consensus estimate -- and said it would eliminate nearly 2,200 positions -- most from its battered investment-banking division -- in a series of moves calculated to re-focus the banking giant on its home market.

The Swiss bank's results would have been worse were it not for a fortuitous change in accounting rules that lets firms value assets -- no matter how depreciated at the moment -- at prices they could command at maturity. (In other words, accounting rules put in place to keep publicly traded companies on the straight and narrow after the Enron debacle have been done away with.)

UBS' re-commitment to its home market is interesting. Its move out of Switzerland into neighboring countries in Europe in the late 1990s was largely in reaction to liberalizing initiatives by European Union members to stem the flow of private-banking assets into Switzerland. At the same time, de-regulation of U.S. financial-service markets and a bull run of nearly two decades made retail brokerage seem a necessary ingredient to competing in U.S. markets with home-grown multi-line banks. -FWR

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