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RegulationsJune 3 2009

UBS returns to its roots

Investment banking losses and US tax evasion charges sent clients of the leading wealth manager scurrying for the exits. But the crisis has renewed UBS's determination to succeed in private banking. Writer Philip Alexander
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Once the world's premier wealth manager and flagship for Swiss private banking, UBS has seen an outflow of clients mirroring the pain of its investment bank that was one of the most exposed to the subprime crisis. In 2008, the investment banking division lost SFr34bn ($30.3bn), which partly provoked a net new money outflow of SFr664bn in private client assets.

The woes of UBS are perhaps atypical. For some of its largest competitors, private banking is a small component that has not always fitted with existing lines. For UBS, it is the origin of the bank, and the troubles stem from the business model straying even further into investment banking. Former CEO Marcel Rohner said in April 2008: "We used our surplus cash flow from the wealth management business to promote organic growth in the investment bank. That was where we went wrong."

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