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Exclusive: UBS shrinks advisory team for rich in emerging markets

The logo of Swiss bank UBS is seen at a branch office in Zurich October 29, 2013. REUTERS/Arnd Wiegmann
The logo of Swiss bank UBS is seen at a branch office in Zurich October 29, 2013. REUTERS/Arnd Wiegmann

By Katharina Bart and Dinesh Nair

ZURICH/DUBAI (Reuters) - Swiss lender UBS is scaling back corporate advisory and investment banking services for ultra-rich clients in some emerging market countries to reduce overlap with other departments, three sources familiar with the plan said.

The move comes one year after Chief Executive Sergio Ermotti said UBS would let go 10,000 staff and eventually derive profits almost solely from its private banking unit, which caters to the financial needs of the wealthy.

Since then, UBS has cut more than 3,000 jobs, the bulk at its securities unit. At the private bank, where it is not unusual for client relationships to be forged over generations and personalized service is prized, such cuts are far trickier.

The private banking unit being reduced, UBS's Corporate Advisory Group (CAG), offers services such as advice on mergers and acquisitions and initial public offerings, financing options and structured equity products to individuals and entrepreneurs with at least $25 million in investable assets.

The sources said most of the CAG restructuring would take place in emerging markets such as the Middle East, Africa, Turkey and Asia, but did not provide a figure on how many jobs would be eliminated in the move.

"There were overlaps with the normal investment banking operations and it wasn't clear what the CAG staff were doing in certain geographies where there were good investment bankers to execute transactions," one of the sources said.

UBS still employs nearly 2,000 people in Investment Products and Services, a unit led by former investment banker William Kennedy which sells investment bank-style products to its wealthy private clients.

The move comes as UBS fends off demands from Knight Vinke, an activist shareholder, to dispose of its investment bank altogether in order avoid tension with its private bank. UBS has refused to do this.

As part of the CAG restructuring, most of the staff in the division at the bank's Dubai office were leaving. The sources said UBS was negotiating the exit of veteran Gulf Arab banker Albert Momdjian, hired in 2011 from Credit Agricole to run the bank's ultra-high-net worth and corporate advisory group for Middle East and Africa.

UBS declined to comment. Momdjian, who headed Credit Agricole's investment banking unit in the region before joining UBS, declined to comment when contacted by Reuters.

"This is just a general attack on costs because of their desire to improve profitability, particularly around the ultra-high net worth area," said Mediobanca analyst Chris Wheeler.

At the unprofitable CAG unit in Dubai, the bank was only likely to keep one employee out of the six staff, two of the sources said.

Most of the six staff at the unit had joined Momdjian from Credit Agricole's investment banking arm.

The wider CAG unit, which employed nearly 80 bankers across 15 offices, essentially acted as an interface between the bank's wealth management and investment banking operations.

After the restructuring, CAG will only offer advice on corporate finance activities, while the "execution" part will be done by the bank's investment bankers, the sources said, requesting anonymity as the matter had not been made public.

The sources said clients in the region where the unit has been scaled back will continue to be served by existing local wealth management staff, while the bank's investment banking team will pitch for deals required by the clients.

Switzerland's largest bank by assets has overhauled itself following the financial crisis and a series of high-profile scandals, abandoning risky fixed-income activities, hiving off loans and raising capital to restore its reputation.

It remains ensnared in an investigation into alleged collusion on foreign exchange rates.

(Editing by Carmel Crimmins, David Holmes and Anna Willard)

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