Could UBS go under the knife?
Posted
Apr 04 2008, 04:28 PM
by
Matt Koppenheffer
Rating:
Swiss bank UBS has made it abundantly clear that US banks aren't the only ones that can create massive write-downs. The bank has taken a staggering $37 billion in losses, and is headed out to the market to raise new money -- despite the fact that its stock is roughly half of its 52-week peak.
Things have gotten so bad that former UBS president Luqman Arnold has stepped in as an activist investor hoping to change the bank's pitch from "you and us" to "you and us and them." Like the rebellious teenager that set fire to the garage, it's UBS' investment banking division that has caused all the heartache for the venerable bank and Mr. Arnold wants to kick it out of the house.
However, what Mr. Arnold has made known is that he's not in this to take control of UBS -- he's not interested in a chairmanship or executive role. His primary focus is creating a good return on the sizeable position that his investment firm, Olivant, has in UBS.
There are those out there, however, that think drastic action isn't necessary at the bank and the stock may already present good value. Though UBS has a bottom-rung one-star rating in The Motley Fool's CAPS community, there have been a number of bulls supporting the stock lately. One of them, mcnasty91, said:
The worst, I believe, is over for UBS. They are restructuring and are still one of the world's largest and most prestigious banks. Their wealth management is strong and is only poised to grow as the world's wealth, and China grow. They are starting to expand more globally and are a safe bet to outperform and get back to their high or close to it.
While it's hard to argue with the well-established global growth thesis, I think it's tough at this point to make a bet that the gamblers of the banking world -- whether it be UBS, Goldman Sachs, Lehman Brothers, or Merrill Lynch -- are out of the woods yet.
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