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UBP plans expansion into alternatives despite fall in assets

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Geneva-based Union Bancaire Privée has announced gross earnings of CHF166.9m (USD154.5m) for the first half of 2009, with assets under management dropping to CHF81.6 bn as at 30

Geneva-based Union Bancaire Privée has announced gross earnings of CHF166.9m (USD154.5m) for the first half of 2009, with assets under management dropping to CHF81.6 bn as at 30 June 2009, from CHF100.7bn at the end of 2008.

The bank has also made provision for the fallout from its Madoff investments, stating: ‘To fund the incentive scheme instigated by the Bank in March and directed at eligible clients affected by the extensive Madoff fraud, a CHF110m provision was made, which was covered by an equivalent write-back of reserves.’

Although UBP has attracted CHF4bn worth of net inflows of capital from private clients (+8.64 per cent), the difficult market conditions and the industry overhaul took their toll on its alternative investment assets which shrank from CHF45.45bn at the end of 2008 to CHF25.74bn halfway through this year.

The bank remains determined to grow its alternatives and traditional asset management business.

‘UBP’s adaptability has enabled it to rise to the current challenges and to maintain its earnings capacity intact amid the current market turmoil and lack of stability,’ says Guy de Picciotto (pictured), the group’s chief executive. ‘Over the first half of the year, we focused on preserving our clients’ capital, recruiting top-flight talent, seizing new investment opportunities and curbing our costs. We also revised our business model. The decisions taken pave the way for the bank’s future and confirm our long-term commitment to our clients.’

UBP recorded a gross profit of CHF 166.9 million for the first half of 2009 (53.6 per cent down on the first half of 2008), and ascribed the fall to ‘divestments from alternative investments and to negative effects from exchange rate transactions.’

Over the half-year, gross income rose to CHF419m, compared with CHF647m a year before (-35.27 per cent). Income from fees and commissions totalled CHF268.3m (against CHF457.7m in June 2008). Trading income amounted to CHF66m (CHF76.9m in June last year).

Cost-cutting measures in all divisions enabled UBP to reduce its operating expenses by 12.25 per cent to CHF251.9m (down from CHF287m in June 2008). The group’s consolidated cost/income ratio was 65 per cent after depreciation.

The balance sheet totalled CHF21.3bn and the annualised return on equity was 11.7 per cent for the period (compared with 29.1 per cent for the first half of 2008).

The reduction of leverage in its clients’ accounts led to a decrease in liabilities, and the bank states: ‘With a Tier 1 ratio of 24.9 per cent, three times the eight per cent legal minimum, UBP is one of Switzerland’s best capitalised banks. Its liquidity ratio is also very high, more than three times the level required.’

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