Knight Vinke, the activist investor, is not everybody's cup of tea and the directors of UBS may believe that the grumbles of a shareholder that owns less than 1% of the bank can be ignored.
That would be foolish. Eric Knight and his crew have a good record in pointing out uncomfortable truths and some of their ideas (but certainly not all) eventually become adopted. Remember HSBC, where Knight Vinke was lobbying for years for the bank to cut costs and remember its Asian roots, two pillars of today's strategy.
Knight is not the first person to argue that UBS would be better off without its investment bank but he is armed with an excellent statistic. Since the merger between UBS and Swiss Bank Corporation in 1998, he calculates, the investment bank has paid Sfr 115bn in salaries and bonuses to its employees but contributed a negative Sfr 25bn to its parent and shareholders. That's how painful were the colossal write-offs during the crisis, plus the fine for Libor-rigging and the loss on the Kweku Adoboli fraud.
Worse, the calamities in investment banking "weakened the reputation of its prized wealth management division and the all-important trust of its clients", argues Knight. That's almost undeniable given the outflows of funds in 2009 and 2010.
It's all in the past, UBS might respond, the investment bank has just had a sparkling quarter and the private-client business is back on form. Okay, but Knight's point is that the risks have not been removed. He is perfectly right to say that the time to consider a split is when the sun is shining.
He is, however, gloriously vague about how divorce would be achieved in practice, given the capital complications.
Forcing the employees to buy ownership over time sounds like wishful thinking. But at least the branding part would be easy.
If they dig around in the cellars, UBS will find one of the best names in the game – SG Warburg.
UBS should give Knight a proper response. He is probably not the only shareholder who thinks the investment bankers have grown fat at their expense, and may do so again.
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