WSJ: Moody's downgrades UBS across the board - Spear's Magazine

WSJ: Moody’s downgrades UBS across the board

Moody’s Investors Service downgraded various ratings on Swiss bank UBS AG, citing challenges in its investment-banking and wealth-management businesses.

Moody’s Investors Service downgraded various ratings on Swiss bank UBS AG, citing challenges in its investment-banking and wealth-management businesses.

Moody’s lowered the bank financial strength rating two notches to C and the long-term debt and deposit ratings one notch to Aa3, four steps below the top AAA rating. The ratings outlook is negative, meaning further downgrades are possible.

Moody’s pointed out UBS is exposed to more potential losses, especially to bond insurers, and the bank has benefited less than rivals from reviving capital markets. Because of a “significant turnover of senior managers” in the past two years, UBS is forced to pay more for new employees in those jobs and could be pressured to take more risks to compensate, Moody’s said.

The company has suffered a loss of customer confidence, as shown by net new money outflows for seven quarters in a row, and a loss of key employees, especially in the fixed-income section of its investment-banking business.

“We believe that UBS’s wealth management franchise is unlikely to return to previous levels of profitability until the bank can fully restore customer confidence,” said Moody’s Senior Vice President David Fanger.

To read the full story, visit wsj.com



 

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