UBS is considering a separate entity to handle its troubled sub-prime mortgage-related assets. The bank hasn't released much detail about its plans, but The Wall Street Journal says Peter Kurer, who's expected to become chairman this week, "has already identified the bad portfolio and ring-fenced it."
One of the advantages of this approach: It will allow UBS to put together a group of specialists who can deal with the troubled assets without the baggage that comes from being involved in the original credit decisions, the Journal points out. They'll be focused on finding ways to generate earnings instead. It also separates their revenue from the overall UBS bonus pool, so "those who created the mess" don't get rewarded from efforts to fix the problem. Instead, those doing the fixing will get recognized for their work.
Whatever form the entity takes, the Journal notes some kind of market for distressed assets is bound to emerge.
Meantime, Bloomberg says more job cuts are expected at the Switzerland-based firm's investment bank. The news service cites JP Morgan Chase analyst Kian Abouhossein in reporting perhaps 2,500 jobs, 11 percent of the investment bank's workforce, could be eliminated.
