Slimmer UBS targets Asian growth

Bank's plan to lay off 10,000 staff will have minimal impact in this region, and it plans to help bring more Chinese companies to market

PUBLISHED : Monday, 05 November, 2012, 12:00am
UPDATED : Wednesday, 07 November, 2012, 11:17am

Swiss-based investment bank UBS is keen to bring more big Asian clients back to the capital markets next year despite a recent announcement that it will cut 10,000 jobs to save costs.

David Chin, head of the group's Asia investment banking business, said the internal restructuring and lay-off plan would have only a "minimal impact" in the Asia-Pacific region, and he expected to help some big Chinese clients launch stock or bond sales next year.

Some of the economic and political uncertainties affecting investor sentiment - for example the once-in-a-decade power transition on the mainland - would be resolved or diminish in months, and this would help boost investor confidence in capital markets, Chin told the South China Morning Post in an exclusive interview.

"We are optimistic about our investment banking model in Asia which ties in closely with our wealth management business that provides important sources of distribution and referrals," Chin said. He is a long-time investment banker who has helped a number of mainland lenders go public in Hong Kong, including Bank of China and Minsheng Bank.

Last week UBS announced it would wind down its fixed-income business and cut 10,000 banking posts in one of the biggest bonfires of finance jobs since the implosion of Lehman Brothers during the financial crisis in 2008.

It is believed that the fixed income and distressed asset business in Europe and the United States will be the hardest hit.

Chin said the restructuring was aimed at spinning off assets with "an extraordinary amount of risk-weighted exposure" that required sizeable capital. Getting rid of these risky assets could improve the overall return on equity and boost the dividend payout to shareholders.

"In the face of Basel III, regulators globally want banks to have extra capital to protect against downside risk," he said.

The group will target a return on equity of at least 15 per cent by 2015, compared with an earlier target of 12 or 17 per cent.

UBS' headquarters in Switzerland and branches in some European countries might take the biggest hit from the restructuring, Chin said.

In Asia, where UBS generated greater fees last year despite tough competition and a weak market, the bank will retain its long-term commitment to the investment banking market.

In Hong Kong, UBS has taken the lead in bringing major initial public offerings of mainland companies to the market, including Fosun Pharmaceutical and Haitong Securities, which have been some of the biggest new listings of the year.

The bank was also involved in some high-profile bond sales of large companies, including AIG and Bank of Communications.