UBS reshuffle as profit falls

UBS, sponsor of Amer SportsToo in the Volvo Ocean Race, sales through choppy economic markets

ZURICH, Switzerland (CNN) -- UBS, Switzerland's biggest bank, has announced a reshuffle of its management after profit fell 14 percent.

The bank said on Tuesday that investment bank chairman Markus Granziol had decided he would leave the company at the end of August and would be replaced by the current chief executive of UBS Warburg, John Costas.

UBS, the world's seventh biggest bank by market capitalisation, said the changes were part of an expansion of UBS's group executive board from six to 10. Its new members will come from the UK, U.S., Australia and Switzerland to "reflect the international diversity of UBS."

Granziol's departure removes the strongest internal rival to group chairman Marcel Ospel, the Financial Times said before the announcement. UBS surprised investors in December by ousting group chief executive Luqman Arnold after just eight months in the post, amid boardroom differences over key areas of strategy.

First quarter net income fell to 1.36 billion francs ($852 million) from 1.57 billion francs a year ago. Analysts polled by Reuters had expected a net income of about 1.185 billion francs for the three months to March 31.

UBS blamed the decline in profit on "slack economic growth," slowing investment banking activity and continued losses at its UBS Capital private equity unit, which invests in new and private companies.

"UBS Capital continued to record losses because of the effect of wider economic difficulties on private equity valuations and the lack of exit opportunities," Ospel wrote in a letter to investors.

"Unless the market changes convincingly, UBS Capital is likely to continue to perform poorly over the next several quarters."

Pretax profit at its investment-banking unit, UBS Warburg, which also includes the loss-making private equity business, fell 46 percent to 492 million Swiss francs in the first quarter, down from 905 million in the same 2001 quarter.

Investment banking income has declined over the past year as a global economic slowdown forces many companies to rethink plans for mergers, acquisitions and share offerings, choosing instead to concentrate on riding out the economic storm.

UBS said it was hopeful of a recovery in the global markets in the second half of 2002 but was uncertain about its strength.

"The prospects for a global economic recovery in the latter part of the year remain intact, although it is far from certain how strong any growth may be," Ospel said. "Because of this, our results in 2002 are unlikely to improve on the performance in 2001."