UBS addresses volatility

Despite recent volatile market conditions, investment bank UBS[XML1] expects 2009 to be a profitable year, having recently developed a remediation plan to address the lessons learned from the credit crisis.

In a speech given at its extraordinary general meeting yesterday, UBS chairman Peter Kurer highlighted key changes made following its strategy review, including the creation of three autonomous business divisions, each vested with increased authority and accountability.

According to Kurer, the way in which UBS determines and allocates risk capacity is also being adjusted as part of its remediation plan. Additionally, the group has made a number of personnel changes in key positions.

Kurer also stated that despite recent market volatility, UBS would report a small profit for the third quarter, the results of which would be released in early November.

Sydney-based UBS equity strategist Mark Rider said the measures that the bank took following the start of the crisis has put it in good stead to survive the next phase of the global downturn.

“After we admitted to the sub-prime write down we took a lot of remediation measures and raised a lot of capital, which has been pretty prescient in light of the liquidity squeeze this year,” he said. On the local front, Rider said the group was confident it would hold its own amid the volatility offshore.

“Our franchise in Australia, as an investment bank, is much stronger than it is in many other markets, being number one here in the second equities market share.

” According to Rider, “one bright light still there is the emerging market economies, particularly China, however they will not completely resist the downdraft in growth that we’ve seen in the major economies”, Rider said.

“We’ve seen in China tightening monetary policy for a number of years; in fact, last week they announced an easing in monetary policy. So clearly there are concerns starting to emerge in China about growth and its effect on our economy.”