UBS takes earnings hit, separates units

On the same day UBS AG reported a fourth straight quarterly loss, the Zurich, Switzerland-based bank announced plans to separate its investment banking, global asset management and wealth management units. Switzerland’s largest bank posted a second-quarter net loss of $329 million compared with a $4.51 billion-profit in the year-ago period. UBS incurred $5.1 billion in write-downs during the quarter. The losses were mainly in the struggling U.S. real estate market, but also included a provision of $900 million from a recent settlement with federal and state regulators over the sale of its auction rate securities. The bank also suffered outflows of $15.9 billion in its wealth management unit and a revenue drop of 52% in its investment banking division. In announcing plans to separate its investment banking unit, asset management division and wealth management arm into three autonomous operations by the end of 2009, UBS chairman Peter Kurer acknowledged weaknesses in the bank’s previous “one firm” approach. “Some of these weaknesses — such as the blurring of the true risk-reward-profile of individual businesses — are the source of substantial risk, as we have seen in the past few months,” Mr. Kurer said in a statement.