When UBS acquired Paine Webber in 2000, the acquisition was meant to be a cornerstone of the big Swiss bank's expansion in its U.S. wealth management division. Eight years later, UBS is hurting from nearly $37 billion in write-downs and is looking for ways to get back to profitability. One option: the sale of its Paine Webber unit, now known as UBS Wealth Management USA, according to a Reuters story.
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Speculation about UBS has swirled around of late. UBS reportedly hired Lazard to begin a strategic analysis. But simply selling off the high-end retail unit won't be easy. Generally, the financial industry is in upheaval with many big banks looking to unload assets to beef up reserves, not go on a buying spree. Reuters names Bank of America Corp. and Morgan Stanley as likely bidders for the unit valued at around $8 billion. But can either afford such a purchase now? BofA is saddled with bleeding mortgage lender Countrywide Financial Corp., and Morgan Stanley has been hammered with billions in mortgage write-downs, among other credit woes. Moody's Investors Service announced that it will likely downgrade its credit rating on the New York-based investment bank.
On the other hand, both have retail strategies: BofA has a national banking network, and Morgan Stanley has a wealth management operation that came with its merger with Discover. Still, right now, it looks like a long shot. - Gerald Magpily
See Reuters article
See TheDeal.com: Sale rumors boost shares of UBS
Comments
Sometimes it seems like people like to post things just to seem smart. But it isn't smart to jump on speculative bandwagons - there are too many of those. But if you are going to try to sound smart by doing so, it's probably a good idea to get very basic facts straight - Discover was a credit card company. Dean Witter was a retail broker - the definition of which is stretched when referring to it as a wealth management operation.