coming months after writing off $37.5 billion of US
mortgage-related debt could trigger a takeover bid, radically
altering the balance of power in private banking.
With $1.8 trillion of client assets, UBS would put a bidder from
among its competitors in an unassailable position.
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Analysts believe if UBS fails to deliver, then the cheap level of
its stock – off more than 50 percent in the past year – will
inevitably attract acquisition interest. UBS is valued at only
about $70 billion – significantly below the $110 billion
acquisition of ABN AMRO last year by the Royal Bank of Scotland
consortium.
Peter Kurer, successor to the outgoing UBS chairman Marcel Ospel,
says it will take up to three years to put UBS back on track, a
timescale considered by some analysts as far too long.
The bank has issued a mea culpa in the form of a 50-page report
detailing the cause of its write-downs, and said at its annual
general meeting it would scale back its investment bank as a result
of the losses. But onetime UBS president Luqman Arnold, who is
lobbying to break up the company, has received significant support
in senior institutional investment quarters.
Kurer, a lawyer rather than a banker, is still seen as an interim
figure by many, and the new chairman will have to make good on his
promise to appoint board members with more relevant knowledge bases
if activist shareholders are to be placated.
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By GlobalDataWhile few banks would have the clout to acquire UBS, HSBC may
overcome likely Swiss political opposition to launch a bid.
Deutsche Bank could find a UBS deal a transforming transaction amid
the restrictions of its German home market.
UBS is meanwhile to create a “bad bank” to assume its toxic assets
and free it for recovery but the suffering investment bank remains
the big stumbling block.
Ray Soudah, founder of Swiss-based M&A specialist Millenium
Associates believes that for UBS, “everything is now possible,
especially a merger between the non-US investment banking parts of
UBS and Credit Suisse.”
