Activist shareholder Knight Vinke urges UBS to split up investment bank

 

Activist shareholder Knight Vinke today called on Swiss bank UBS to split up its investment bank, most of which is based in London, from its wealth-management and domestic banking activities.

In an open letter to the UBS board, employees, shareholders and customers, Eric Knight, chief of the New York-based fund, said: “The investment bank has delivered a good set of results for the first quarter of 2013 but nearly destroyed UBS in 2007-09.

“Investment banking is a very risky business and these risks pose a serious threat to UBS’s wealth-management and Swiss banking franchises.”

He added: “They may also be preventing them from achieving their true potential.”

Knight Vinke holds less than a 1% stake in UBS, which today was holding its annual meeting in Zurich. In the past, the activist investor has had varied success with campaigns to foment change at Shell, HSBC and electrical retailer Darty.

A UBS spokesman said: “We listen to the ideas of all our shareholders and discuss these ideas with them.

“We will respond to the ideas and comments of our shareholders at our annual general meeting.”

Knight suggested that the best owners of the investment bank could be its own management and employees.

“Since 1998, the investment bank has paid Swfr115 billion (£79.61 billion) in salaries and bonuses to its employees,” he said. “By contrast, over the same period it has contributed a negative Swfr25 billion to its parent and shareholders. Transferring full or partial ownership of the investment bank to insiders would almost certainly lead to more prudent behaviour.”

But UBS chairman Axel Weber told shareholders: “Over the past 12 months, we have made significant progress in many areas.

“UBS is now stronger and better positioned than many of our competitors.”

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