UBS faces fight to uphold reputation among super-rich

Thu Dec 20, 2012 9:35am EST
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By Chris Vellacott and Sinead Cruise

LONDON (Reuters) - Private clients who have stood by UBS UBSN.VX through repeated scandals will have their faith tested by the Swiss bank's admission of rate rigging, investors say.

Chief executive Sergio Ermotti is winding down much of UBS's riskier investment banking arm and believes a return to managing money for the global rich will allow it to earn its way out of trouble.

But the jewel in the crown of the disgraced bank will only keep its luster if it maintains the trust of millionaires keen to park their fortunes in the safest possible hands.

"UBS has been involved in an endless series of incidents in the last couple of years and it will take some time - several years without more damaging news - to restore trust," said one Zurich-based investment manager with a stake in the bank.

UBS was fined $1.5 billion by a posse of international regulators after admitting manipulation of the Libor interest rate, a global benchmark which underpins financial transactions worth trillions of dollars.

Criminal charges could be brought against staff for their role in fixing rates and a probe by Hong Kong's de facto central bank into alleged misconduct could yet lead to further fines in 2013.

With its reputation under attack, investors say there's no way of knowing how many risk-conscious clients will stick around while UBS atones for its Libor sins.

"Judging whether individual clients, charities or foundations will leave the bank as a result of this is very difficult to say," said Neil Wilkinson, portfolio manager at Royal London Asset Management.   Continued...

The logo of Swiss bank UBS is seen at their offices in New York December 19, 2012. REUTERS/Andrew Burton