By Jacqueline Simmons March 30 (Bloomberg) — Oswald Gruebel , who parlayed bond expertise into the top jobs at Switzerland’s biggest banks, is rebuilding UBS AG ’s fixed-income business, which reaped about $2.3 billion of revenue this quarter, people familiar with the matter said. UBS may have revenue of almost $1 billion from credit alone, said the people, who declined to be identified because the figures haven’t been publicly released. Gruebel, 66, a former Eurobond trader who also ran Credit Suisse Group AG, hired about 350 people at the fixed-income unit, which includes emerging markets and foreign exchange, in the past year. “The new hires and position-taking in the first quarter delivered fixed-income revenue ahead of targets,” said Simon Maughan , an analyst at MF Global Securities who rates UBS “buy.” “That’s two ticks in the box for Gruebel.” The performance marks a reversal of fortune for the bank’s debt unit, which was responsible for most of the more than $57 billion in writedowns and losses during the credit crisis. Gruebel, who became chief executive officer at UBS in February 2009, named Rajeev Misra , 48, and Dimitri Psyllidis , 43, co- heads of the fixed-income division in January. UBS said in a statement today that $2.3 billion is “slightly higher” than its current estimate for the period. The bank rose 49 centimes, or 3 percent, to 17.09 Swiss francs, the most since March 5. The stock has advanced 6.5 percent in 2010. Possible ‘Adjustments’ In its statement, UBS said that “because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit,” the estimate of about $2.3 billion “may not be reliable.” UBS will publish first-quarter results on May 4. Banks are profiting from trading and selling debt as credit markets recover to levels not seen since 2007. Goldman Sachs Group Inc. ’s fixed-income, currencies and commodities unit will probably report revenue of $6.8 billion for the first quarter, up from $4 billion in the fourth quarter and $6.6 billion in the first quarter of 2009, according to a note from Richard Staite , an analyst at Atlantic Equities. He rates New York-based Goldman Sachs “overweight.” Gruebel’s Rise Gruebel, a war orphan raised by his grandparents in East Germany, worked at Zurich-based Credit Suisse for 37 years. He moved to West Germany when he was 10 to live with relatives and got into banking after school as a trainee at Deutsche Bank AG . At Credit Suisse, Gruebel, who has no university education, rose through the ranks from the bank’s Eurobond trading desk. In the three years after he took over as sole CEO in 2004, Gruebel doubled Credit Suisse’s profit and share price . It was under his watch in 2006 that the bank started cutting its holdings of U.S. subprime mortgage bonds, while UBS was still buying them. At UBS, Gruebel picked new management for the investment bank and starting weekly calls with top risk officers. He sold UBS’s Brazil unit and raised 3.8 billion francs ($3.6 billion) from investors to boost capital. A recovery at the investment bank, which includes equities and investment banking as well as fixed income, helped the bank report its first profit in more than a year last month. Asia Hires UBS’s hires so far this year include Thomas Siegmund , formerly of Nomura Holdings Inc. , and Shahryar Mahbub , previously at New York-based Citigroup Inc., to co-head fixed- income Asia, people close to the bank said. UBS also hired Edward Hubner and two other credit traders from Deutsche Bank AG in New York, according to the people. The fixed-income unit is composed of three businesses: credit, emerging markets and “macro,” including foreign exchange, money market and interest-rate sales and trading. A turnaround at the debt unit will be “central” to the bank’s goal of reaching an annual pretax profit of 15 billion francs in three to five years, UBS said in November. Carsten Kengeter , 42, gave up his role as co-head of fixed income in January to focus on his position as co-chief of UBS’s investment bank. Alexander Wilmot-Sitwell , 49, leads the investment bank with Kengeter. Misra, who left Deutsche Bank in June 2008, joined UBS last year as global head of credit at its investment bank. Psyllidis, formerly of Merrill Lynch, joined the Swiss bank last year to head foreign exchange and rates trading globally. UBS aims to generate about 40 percent of the investment bank’s total revenue from fixed income in three-to-five years, or at least 8 billion francs annually. That would return fixed- income revenue to the levels achieved before the credit crisis led to record losses at the bank. UBS aims to reach an annual pretax profit of 6 billion francs at the investment bank over the next three to five years, after losses since 2007. To contact the reporters responsible for this story: Jacqueline Simmons in Paris at jackiem@bloomberg.net .
Originally posted here:
Gruebel Rebuilds Fixed-Income Unit, Boosting Revenue
