UBS Capital has ceased investment activity in Europe and will concentrate on managing the existing assets in its portfolio to maximise value for shareholders. Third quarter results for the portfolio were negatively impacted by valuation losses recording a pre-tax loss of CHF418 million, CHF304 million more than the same period last year. The loss is due to higher writedowns in the portfolio, reflecting continuing tough economic conditions for portfolio companies and the difficulty of effecting successful exits. Writedowns totalled CHF387 million and were made across the portfolio in all regions. UBS Capital will continue to maximise returns on its existing portfolio, capitalising on exit opportunities where they exist.
A spokesperson for the group stressed that there was no intention to sell the private equity business and the group continues to manage assets in Asia and the States, where it has also invested in third party funds.
The Swiss bank has also announced that it is adopting a single UBS brand. From the second half of 2003, the firm will no longer market its services using the UBS Warburg or UBS PaineWebber brands. Both costs and headcount at UBS are at the lowest point since its merger with PaineWebber in 2000. The decision to introduce a single brand will lead to a non-cash net writedown of around CHF1 billion relating to the PaineWebber brand, which is currently capitalised on the UBS balance sheet.
In a statement to shareholders, Peter Wuffli, president of the group executive board, said: “In the current environment, we need a prudent balance between our acknowledged defensive characteristics and our entrepreneurial attitude towards the mid- and long-term growth prospects of our global franchise.”
But for now the prospects of a sustained global economic recovery remain distant and investor confidence in equity markets remains low. UBS’ view is that its 2002 results are unlikely to reach those of 2001.