WHEN UBS ANNOUNCED that it would be selling a stake to investors in Singapore and the Middle East in December, it highlighted the vulnerability of private banks that have investment banking businesses attached to them. As UBS’s chief executive, Marcel Rohner, put it during the announcement: “An investment bank can and will incur losses. But it should never drag the whole group into loss-making territory. Wealth management clients don’t like this uncertainty.”
At the end of the third quarter of 2007, UBS’s wealth management business posted a record pre-tax profit but its investment banking business line recorded a loss of almost SFr3.7
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