As UBS AG continues to grapple with the fallout of its rogue trading scandal, UBS Wealth Management Americas Chief Executive Robert McCann has moved to reassure the firm’s U.S.-based financial advisors that its wealth business is “stronger than ever.”
“We've come too far -- with even more potential -- to let this setback distract us from our goals and objectives,” McCann said in a memo sent Monday to UBS Wealth Management Americas employees and obtained by On Wall Street.
McCann’s memo comes after UBS has admitted to losing $2.3 billion last week after uncovering unauthorized trades made by a trader at its London-based global synthetic equity business.
Even as UBS Chief Executive Oswald Gruebel and the bank’s board weigh how to deal with the repercussions of the scandal, McCann urged the U.S. wealth management staff to stay focused.
“Your jobs are demanding as is,” McCann said in the memo. “So I know how much more challenging it becomes when something like this happens. This situation is frustrating and unacceptable.”
McCann also reminds the employees that the U.S. wealth management business is still profitable, still hiring and getting high satisfaction marks from clients. Overall, UBS still has a strong balance sheet and competitive credit ratings, he said.
“All of you have worked so hard turning [Wealth Management Americas] around, making it a better place to be both an employee and a client,” McCann said. “We cannot lose sight of that. Our colleagues and clients are counting on us.”
McCann’s memo may not be as much of a reflection of financial advisor jitters as it is of McCann’s communicative leadership style, said financial services recruiter Danny Sarch, president of White Plains, N.Y.-based Leitner Sarch Consultants.
“It’s seen as a one-off, a true rogue event, as opposed to something systemically wrong,” Sarch said of the scandal. “I think there was a pause (in recruitment activity), but there’s still strong interest in the story because it’s so different from the other big firms.”
But financial services recruiter Michael King, president of New York-based Michael King Associates, said he now sees UBS on the same level as Bank of America Merrill Lynch, which are “almost toxic” to new recruits.
“I think people are still leery about going over to UBS, very leery,” King said.
McCann’s memo comes as UBS has so far said little publicly about how it plans to move forward after the scandal, particularly with expected changes to its investment bank. The firm is scheduled to hold its third quarter earnings call on Oct. 25, when it has acknowledged it might announce a loss as a result of the unauthorized trading.
While Gruebel will likely be safe in his position, Alois Pirker, a research director at Boston-based financial services research firm Aite Group, said UBS’ risk management could be subject to personnel eliminations.
“They have to react and show some actions relatively soon,” Pirker said of the firm. “They don’t have weeks to spare anymore. I don’t think they can wait until November to announce [changes]. They need to be quicker here.”