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122-598: Interhandel was publicly traded in Switzerland from its formation as IG Chemie with a complex structure of ordinary and preference shares, which concentrated voting rights with an array of Swiss investment banks. Approximately 80% of its capital was tied up in the long-running GAF investment, with the remainder consisting of various small chemical companies, Bank Hoffman of Switzerland, a small bank in Panama and various property investments - most of which had been acquired after

244-529: A branch office in New York. The bank also established a UK subsidiary in 1975 and a U.S. subsidiary in 1979 to focus on building the bank's presence in the underwriting of debt and equity securities. Nevertheless, UBS, which had traditionally concentrated its efforts on the domestic Swiss market, was the last of the three largest Swiss banks to establish a branch office in the U.S. and its securities operations were overshadowed by those of its two Swiss peers. By

366-466: A global investment banking business, Warburg Dillon Read through its acquisitions of Dillon Read in New York and S.G. Warburg in London. Swiss Bank was generally considered to be further along than UBS in developing its international investment banking business, particularly in the higher margin advisory businesses where Warburg Dillon Read was considered to be the more established platform. UBS, on

488-413: A global investment banking business, Warburg Dillon Read through its acquisitions of Dillon Read in New York and S.G. Warburg in London. Swiss Bank was generally considered to be further along than UBS in developing its international investment banking business, particularly in the higher margin advisory businesses where Warburg Dillon Read was considered to be the more established platform. UBS, on

610-544: A group of smaller banks in Switzerland in 1994 and then acquiring the Cantonal Bank of Appenzell-Ausserrhoden in 1996. In its final acquisition, prior to the merger with Swiss Bank Corporation, the bank acquired Schröder, Münchmeyer, Hengst & Co. from Lloyds TSB in 1997 in order to further penetrate the German investment banking market as well as the market for wealthy private clients. Schröder Münchmeyer Hengst

732-428: A group of smaller banks in Switzerland in 1994 and then acquiring the Cantonal Bank of Appenzell-Ausserrhoden in 1996. In its final acquisition, prior to the merger with Swiss Bank Corporation, the bank acquired Schröder, Münchmeyer, Hengst & Co. from Lloyds TSB in 1997 in order to further penetrate the German investment banking market as well as the market for wealthy private clients. Schröder Münchmeyer Hengst

854-566: A hub of European M&A activity, often facilitating the most capital movement and corporate restructuring in the area. Meanwhile, Asian cities are receiving a growing share of M&A activity. According to estimates published by the International Financial Services London , for the decade prior to the financial crisis in 2008, M&A was a primary source of investment banking revenue, often accounting for 40% of such revenue, but dropped during and after

976-720: A key part of capital market transactions, involving debt structuring , exit financing, loan amendment, project finance , leveraged buy-outs , and sometimes portfolio hedging. The "Market Risk Team" provides services to investors via derivative solutions, portfolio management , portfolio consulting, and risk advisory. Well-known "Risk Groups" are at JPMorgan Chase , Morgan Stanley , Goldman Sachs and Barclays . J.P. Morgan IB Risk works with investment banking to execute transactions and advise investors, although its Finance & Operation risk groups focus on middle office functions involving internal, non-revenue generating, operational risk controls. The credit default swap , for instance,

1098-456: A key service in terms of advisory and strategy. While the research division may or may not generate revenue (based on the specific compliance policies at different banks), its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. Research also serves outside clients with investment advice (such as institutional investors and high-net-worth individuals) in

1220-415: A major coup in 1985 by pricing a large bond offering for Nestlé, Rockwell, IBM, and Mobil at below market rates. The bank also made two major acquisitions in 1986, first it purchased Phillips & Drew an established British brokerage and asset management firm, founded in 1895. However, UBS initially had issues integrating Phillips & Drew. The firm lost £15 million when a rush of orders overwhelmed

1342-409: A major issue for UBS in the mid-1990s and a series of revelations in 1997 brought the issue to the forefront of national attention in 1996 and 1997. UBS confirmed that a large number of accounts that had gone unclaimed as a result of the bank's policy of requiring death certificates from family members to claim the contents of the account. UBS's handling of these revelations were largely criticized and

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1464-578: A number of banks in its first decade as a combined bank and expanded its branch network, establishing representation throughout Switzerland by 1923. UBS acquired a controlling interest in Aargauische Creditanstalt in 1913 and Banque Ch. Masson & Cie. in 1916. Although the bank suffered during World War I and the postwar economic crises in Europe, UBS continued to make acquisitions after the conclusion of World War I. The bank purchased

1586-764: A particularly warm reception from the American Jewish community. In 1997, the World Jewish Congress lawsuit against Swiss banks (WJC) was launched to retrieve deposits made by victims of Nazi persecution during and prior to World War II. Negotiations involving Union Bank of Switzerland, Credit Suisse , the WJC and Stuart Eizenstat , on behalf of the U.S., ultimately resulted in a settlement of US$ 1.25 billion in August 1998. The settlement, which coincided with UBS's merger with Swiss Bank, together with

1708-699: A range of companies and projects. The bank would be involved in funding the Swiss Locomotive and Machine Works , the hotel Baur au Lac in Zürich and many other companies. The bank capitalized on its location at an important Swiss railroad junction and its large warehousing facilities allowed the bank to take advantage of the dramatic rise in cotton prices caused by the American Civil War . The Bank in Winterthur saw its share capital double by

1830-463: A result of selling complex derivatives contracts to local municipalities in Europe and the US. Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects

1952-576: A rush of orders overwhelmed the firm's settlement system in 1987. Then the bank lost £48 million as a result of Philips & Drew positions in the October 1987 stock market crash . Between April 1987 and February 1988, UBS was required to spend as much as £115 million to shore up Phillips & Drew. Phillips & Drew unit returned to profitability in 1992 after years of losses. UBS also expanded into West Germany, acquiring Deutsche Länderbank in 1986. In 1991, UBS made its first acquisition in

2074-566: A third from 2009, as companies pursued less deals and traded less. Differences in total revenue are likely due to different ways of classifying investment banking revenue, such as subtracting proprietary trading revenue. In terms of total revenue, SEC filings of the major independent investment banks in the United States show that investment banking (defined as M&A advisory services and security underwriting) made up only about 15–20% of total revenue for these banks from 1996 to 2006, with

2196-1318: A trader after he buys or sells a product to a client and does not hedge his total exposure. Here, and in general, banks seek to maximize profitability for a given amount of risk on their balance sheet. Note here that the FRTB framework has underscored the distinction between the " Trading book " and the " Banking book " - i.e. assets intended for active trading, as opposed to assets expected to be held to maturity - and market risk capital requirements will differ accordingly. The necessity for numerical ability in sales and trading has created jobs for physics , computer science , mathematics , and engineering PhDs who act as "front office" quantitative analysts . The securities research division reviews companies and writes reports about their prospects, often with "buy", "hold", or "sell" ratings. Investment banks typically have sell-side analysts which cover various industries. Their sponsored funds or proprietary trading offices will also have buy-side research. Research also covers credit risk , fixed income , macroeconomics , and quantitative analysis , all of which are used internally and externally to advise clients; alongside "Equity", these may be separate "groups". The research group(s) typically provide

2318-498: Is a commodity business, but structuring and trading derivatives have higher margins because each over-the-counter contract has to be uniquely structured and could involve complex pay-off and risk profiles. One growth area is private investment in public equity (PIPEs, otherwise known as Regulation D or Regulation S). Such transactions are privately negotiated between companies and accredited investors . Banks also earned revenue by securitizing debt, particularly mortgage debt prior to

2440-558: Is a criminal offence in Switzerland. Both proceedings were discontinued by the District Attorney in September 1997. Meili was suspended from his job at the security company that served UBS, following a criminal investigation. Meili and his family left Switzerland for the United States where they were granted political asylum . By contrast, in the U.S., Meili was largely regarded as a hero and whistleblower and received

2562-685: Is a famous credit risk hedging solution for clients invented by J.P. Morgan's Blythe Masters during the 1990s. The Loan Risk Solutions group within Barclays' investment banking division and Risk Management and Financing group housed in Goldman Sach's securities division are client-driven franchises. Risk management groups such as credit risk, operational risk, internal risk control, and legal risk are restrained to internal business functions — including firm balance-sheet risk analysis and assigning

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2684-520: Is broken up into the Bulge Bracket (upper tier), Middle Market (mid-level businesses), and boutique market (specialized businesses). Unlike commercial banks and retail banks , investment banks do not take deposits . The revenue model of an investment bank comes mostly from the collection of fees for advising on a transaction, contrary to a commercial or retail bank. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999 by

2806-578: Is buying and selling products. Sales is the term for the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on a caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading rooms , which can price and execute trades, or structure new products that fit a specific need. Sales make deals tailored to their corporate customers' needs, that is, their terms are often specific. Focusing on their customer relationship, they may deal on

2928-486: Is changed into Union Bank of Switzerland (UBS). The merged bank shows the following figures for 1912: Total assets: CHF202 million. Shareholders' Equity: CHF46 million. Profit: CHF2.4 million. Dr. Rudolf Ernst (1865–1956) First Chairman of the Board of Directors of the merged bank from 1912 until 1941 is Rudolf Ernst, of Winterthur, until 1921 alternating with C. Emil Grob-Halter of Lichtensteig. After

3050-444: Is classed as either "sell side" or "buy side". The " sell side " involves trading securities for cash or for other securities (e.g. facilitating transactions, market-making), or the promotion of securities (e.g. underwriting, research, etc.). The " buy side " involves the provision of advice to institutions that buy investment services. Private equity funds, mutual funds , life insurance companies, unit trusts , and hedge funds are

3172-486: Is not a comprehensive summary of all middle-office functions within an investment bank, as specific desks within front and back offices may participate in internal functions. The back office data-checks trades that have been conducted, ensuring that they are not wrong, and transacts the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank. Every major investment bank has considerable amounts of in-house software , created by

3294-408: Is raised for the corporation include those listed aside. This work may involve, i.a., subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. A pitch book , also called a confidential information memorandum (CIM), is a document that highlights the relevant financial information, past transaction experience, and background of the deal team to market

3416-646: Is the control function for the Markets' business and conducts review of sales and trading activities utilizing the VaR model . Other Middle office "Risk Groups" include country risk, operational risk, and counterparty risks which may or may not exist on a bank to bank basis. Front office risk teams, on the other hand, engage in revenue-generating activities involving debt structuring, restructuring, syndicated loans , and securitization for clients such as corporates, governments, and hedge funds. Here "Credit Risk Solutions", are

3538-748: The Gramm–Leach–Bliley Act , the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G7 countries, have historically not maintained such a separation. As part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 ( Dodd–Frank Act of 2010 ), the Volcker Rule asserts some institutional separation of investment banking services from commercial banking. All investment banking activity

3660-603: The Securities Association of China is a self-regulatory organization whose members are largely investment banks. Global investment banking revenue increased for the fifth year running in 2007, to a record US$ 84 billion, which was up 22% on the previous year and more than double the level in 2003. Subsequent to their exposure to United States sub-prime securities investments, many investment banks have experienced losses. As of late 2012, global revenues for investment banks were estimated at $ 240 billion, down about

3782-634: The financial crisis of 2007–08 and the subsequent passage of the Dodd-Frank Act of 2010 , regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading. The traditional service of underwriting security issues has declined as a percentage of revenue. As far back as 1960, 70% of Merrill Lynch 's revenue was derived from transaction commissions while "traditional investment banking" services accounted for 5%. However, Merrill Lynch

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3904-641: The life insurance business in 1993 establishing UBS Life. UBS formed a joint venture with Swiss Life in 1995, known as UBS Swiss Life. UBS took a 25% ownership position in Swiss Life in exchange for a 50% share in the joint venture. UBS entered the 1990s clearly the largest and most conservative of the three large Swiss Banks. Unlike Swiss Bank and Credit Suisse, which had both made aggressive international acquisitions in trading and investment banking, UBS's investments had been more conservative in businesses such as asset management and life insurance while 60% of

4026-582: The life insurance business in 1993 establishing UBS Life. UBS formed a joint venture with Swiss Life in 1995, known as UBS Swiss Life. UBS took a 25% ownership position in Swiss Life in exchange for a 50% share in the joint venture. UBS entered the 1990s clearly the largest and most conservative of the three large Swiss Banks. Unlike Swiss Bank and Credit Suisse, which had both made aggressive international acquisitions in trading and investment banking, UBS's investments had been more conservative in businesses such as asset management and life insurance while 60% of

4148-555: The "Mutual Fund for Swiss Stocks FONSA" and the "South Africa Trust Fund SAFIT". The Bank in Winterthur and the Toggenburger Bank merge to form the Schweizerische Bankgesellschaft. Its French name is Union de Banques Suisses (UBS) and its Italian name is Unione di Banche Svizzere (UBS). The English name of the bank at first is Swiss Banking Association. In 1921 that somewhat inappropriate name

4270-466: The "New UBS" to distinguish itself from the former Union Bank of Switzerland, the combined bank became the second largest in the world, at that time, behind only the Bank of Tokyo-Mitsubishi . Additionally, the merger pulled together the banks' various asset management businesses to create the world's largest money manager, with approximately US$ 910 billion in assets under management. The merger, which

4392-416: The "New UBS" to distinguish itself from the former Union Bank of Switzerland, the combined bank became the second largest in the world, at that time, behind only the Bank of Tokyo-Mitsubishi . Additionally, the merger pulled together the banks' various asset management businesses to create the world's largest money manager, with approximately US$ 910 billion in assets under management. The merger, which

4514-405: The 1960s punctuated by the acquisition of Interhandel (Industrie- und Handelsbeteiligungen AG) in 1967. Interhandel, originally, was a large Swiss conglomerate that up until the 1960s had both financial as well as industrial holdings. Interhandel was the corporate successor of I.G. Chemie, which the U.S. government had claimed was a front for Germany's I.G. Farben during World War II. During the war,

4636-574: The 1980s, the bank had undertaken a major push into the securities business internationally. The bank established a position as a leading European underwriter of Eurobonds and pulled off a major coup in 1985 by pricing a large bond offering for Nestlé, Rockwell, IBM, and Mobil at below market rates. The bank also made two major acquisitions in 1986, first it purchased Phillips & Drew an established British brokerage and asset management firm, founded in 1895. However, UBS initially had issues integrating Phillips & Drew. The firm lost £15 million when

4758-578: The Crédit Gruyérien (1957), Crédit Sierrois (1957), Bank Cantrade AG (1960) and Volksbank in Visp (1960). In addition to these bank acquisitions, UBS also acquired an 80% stake in Argor SA, a Swiss precious metal refinery founded in 1951, through whom they started to issue UBS branded gold bars. In 1973, the bank increased the stake to full 100% ownership only to withdraw by 1999 with ownership of

4880-916: The National Investment Banking Association (NIBA). In Europe, the European Forum of Securities Associations was formed in 2007 by various European trade associations. Several European trade associations (principally the London Investment Banking Association and the European SIFMA affiliate) combined in November 2009 to form the Association for Financial Markets in Europe (AFME). In the securities industry in China ,

5002-634: The Schweizerische Vereinsbank in Bern establishing representation in the last of the major cities in Switzerland. Through the Great Depression, UBS pared its assets considerably shrinking from CHF993 million in 1929 to CHF441 million at the end of 1935. The bank saw its shareholders' capital decline from CHF100 million in 1929 to CHF80 million in 1933 and then further to CHF40 million by 1936. However,

Interhandel - Misplaced Pages Continue

5124-476: The U.S. government seized General Aniline & Film (later GAF Corporation), an Interhandel subsidiary, and it was not until 1963 that the long-running dispute between Interhandel and the U.S. government was resolved. The shares in GAF Corporation were sold in a highly competitive auction in 1965 and the proceeds were split between Interhandel and the U.S. government. As a result of the sale of GAF, at

5246-462: The United States must be a licensed broker-dealer and subject to U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation. The Dutch East India Company was the first company to issue bonds and shares of stock to the general public. It was also the first publicly traded company , being the first company to be listed on an official stock exchange . Investment banking has changed over

5368-618: The United States, commercial banking and investment banking were separated by the Glass–Steagall Act , which was repealed in 1999. The repeal led to more " universal banks " offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable full-service investment banks with a significant investment banking division (IBD) include JPMorgan Chase , Bank of America , Citigroup , Deutsche Bank , UBS (Acquired Credit Suisse ), and Barclays . After

5490-548: The United States, purchasing Chase Investors Management Corporation, the asset management business of Chase Manhattan Bank . Chase Investors, which was established in 1972, was subsequently folded into UBS Asset Management after the acquisition. At the time of the acquisition, which resulted in approximately US$ 100 million for Chase, the business managed in excess of US$ 30 billion in public and private pension plans, as well as various financial assets of corporations, governments, foundations and endowments. UBS also entered

5612-548: The United States, purchasing Chase Investors Management Corporation, the asset management business of Chase Manhattan Bank . Chase Investors, which was established in 1972, was subsequently folded into UBS Asset Management after the acquisition. At the time of the acquisition, which resulted in approximately US$ 100 million for Chase, the business managed in excess of US$ 30 billion in public and private pension plans, as well as various financial assets of corporations, governments, foundations and endowments. UBS also entered

5734-411: The acquisition of a series of Swiss financial businesses in 1969, including Banque Orca, Abri Bank Bern, Aufina Bank and AKO Bank. UBS also began to intensify its overseas expansion. In 1967, UBS opened a full branch office in London, its first such office outside Switzerland. Prior to this, UBS had operated through a series of correspondent banks and representative offices. Three years later, UBS opened

5856-475: The bank continued to acquire smaller, weaker competitors, purchasing Banca Unione di Credito in Lugano and Chiasso in 1935 followed by Berner Handelsbank in Bern in 1938. In 1937, UBS established Intrag AG, an asset management business responsible for investment trusts (i.e., mutual funds ) and set up the "America-Canada Trust Fund AMCA". Over the years, Intrag would set up a series of other funds, including

5978-486: The bank received significant negative attention in the U.S. UBS came under significant pressure, particularly from American politicians, to compensate Holocaust survivors who were making claims against the bank. In January 1997, Christoph Meili , a night watchman at the Union Bank of Switzerland, found employees shredding archives compiled by a subsidiary that had extensive dealings with Nazi Germany . The shredding

6100-461: The bank remained primarily focused on its domestic business. Prior to the end of World War II , the Swiss banking landscape was dominated by Swiss Bank Corporation and Credit Suisse . UBS was among the next group of large banks that included Schweizerische Volksbank (Swiss Volksbank or Swiss Popular Bank) and Bank Leu . Throughout the 1950s and 1960s, the Union Bank of Switzerland, which was at best

6222-407: The bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. Recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions. On behalf of the bank and its clients, a large investment bank's primary function

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6344-459: The bank would begin to shift its operations to Zürich from its historical headquarters in the cities of Winterthur and St. Gallen, Switzerland. In 1917, UBS completed construction of a new headquarters in Zürich on Bahnhofstrasse , considered to be the Wall Street of Switzerland. The new bank used different names in its three core languages: German, French and English. In German, the bank

6466-548: The bank's embarrassment in the Long Term Capital Management collapse in 1998 brought a degree of closure to the issue. Shortly after the end of World War II , UBS completed the acquisition of Eidgenössische Bank, a large Zürich-based bank that became insolvent. As a result of the merger, UBS exceeded CHF1 billion of assets for the first time and completed the transition of its operations to Zürich. Although UBS opened an office in New York in 1946,

6588-444: The bank's profitability. See also Chinese wall § Finance . This area of the bank includes treasury management , internal controls (such as Risk), and internal corporate strategy. Corporate treasury is responsible for an investment bank's funding, capital structure management, and liquidity risk monitoring; it is (co)responsible for the bank's funds transfer pricing (FTP) framework. Internal control tracks and analyzes

6710-436: The bank's profits came from its even more conservative Swiss banking operations. In 1993, Credit Suisse outbid UBS for Switzerland's Swiss Volksbank, the fifth largest bank in Switzerland which had run into financial difficulties in the early 1990s. The acquisition propelled Credit Suisse ahead of UBS as the largest bank in Switzerland for the first time. UBS instead settled on a group of less audacious acquisitions, purchasing

6832-436: The bank's profits came from its even more conservative Swiss banking operations. In 1993, Credit Suisse outbid UBS for Switzerland's Swiss Volksbank, the fifth largest bank in Switzerland which had run into financial difficulties in the early 1990s. The acquisition propelled Credit Suisse ahead of UBS as the largest bank in Switzerland for the first time. UBS instead settled on a group of less audacious acquisitions, purchasing

6954-413: The capital flows of the firm, the finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the United States and United Kingdom, a comptroller (or financial controller) is a senior position, often reporting to

7076-512: The chief financial officer. Risk management involves analyzing the market and credit risk that an investment bank or its clients take onto their balance sheet during transactions or trades. Middle office "Credit Risk" focuses around capital markets activities, such as syndicated loans , bond issuance, restructuring , and leveraged finance. These are not considered "front office" as they tend not to be client-facing and rather 'control' banking functions from taking too much risk. "Market Risk"

7198-567: The client's agent in the issuance of debt or equity securities . An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making , trading of derivatives and equity securities , FICC services ( fixed income instruments, currencies , and commodities ) or research (macroeconomic, credit or equity research). Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses. As an industry, it

7320-431: The collapse of several notable investment banks, such as the bankruptcy of Lehman Brothers (one of the largest investment banks in the world) and the hurried fire sale of Merrill Lynch and the much smaller Bear Stearns to much larger banks, which effectively rescued them from bankruptcy. The entire financial services industry, including numerous investment banks, was bailed out by government taxpayer funded loans through

7442-411: The cornerstones for the successful merger in 1912 with the Toggenburger Bank to form Union Bank of Switzerland. Rudolf Ernst also held directorships on the boards of various industrial and insurance companies. Between 1912 and his retirement in 1941, he was chairman of the Board of Union Bank of Switzerland, in an alternating capacity with Carl Emil Grob-Halter, who held the chairmanship in 1916 and 1918 as

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7564-654: The derivatives losses prompted UBS to accept the terms proposed by Swiss Bank more readily than they otherwise would have. Prior to its merger with Swiss Bank Corporation, UBS operated as a full-service bank and a provider of wholesale financial services through its retail banking , commercial banking , investment banking , asset management and wealth management businesses. In 1997, prior to its merger with Swiss Bank Corporation, UBS operated 275 branches in Switzerland and 82 branches, subsidiaries and representative offices outside Switzerland. The company had approximately 27,611 employees, of which 19,355 worked in Switzerland and

7686-414: The derivatives losses prompted UBS to accept the terms proposed by Swiss Bank more readily than they otherwise would have. Union Bank of Switzerland, suffering criticism of its conservative business model, was looking for ways to catch up to its key Swiss rivals and viewed LTCM as the type of client that could help accelerate the bank's growth. In 1997, UBS entered into a financing arrangement with LTCM and

7808-468: The documents as ordered, even though it was accepted that the plaintiff had made good faith efforts to produce the Sturzenegger documents, the plaintiff's suit to recover their seized properties was dismissed with prejudice because they had been unable to meet the compliance standard of the US courts required for legal procedures. Union Bank of Switzerland Union Bank of Switzerland ( UBS )

7930-399: The early 1860s. UBS then continued to grow through acquisitions, including Aargauische Kreditanstalt in 1919, Eidgenössische Bank  [ de ] in 1945, Interhandel Basel in 1967, Phillips & Drew in 1986, and Schröder, Münchmeyer, Hengst & Co. in 1997 among others. The historical UBS logo comprises the initials "UBS" horizontally, crossed by vertical "SBG", referring to

8052-558: The end of World War II, under the control of Managing Director Walter Germann, a relative of M. Greutert, a banker and the I.G Farben representative on the I.G. Chemie board of directors. In 1958, prior to the successful resolution of the GAF/Interhandel case in the United States, a number of shareholders who had previous links to I.G. Farben (including Industrie Bank and M. Sturzenegger) were bought out, and UBS Bank’s chairman Dr. Alfred Schafer became chairman of Interhandel. In

8174-452: The end of the 19th century. The Union Bank of Switzerland was formed in 1912 when the Bank in Winterthur merged with the Toggenburger Bank. The combined bank had total assets of CHF202 million and a total shareholders' equity of CHF46 million. This combination was part of a larger trend toward concentration in the banking sector in Switzerland at the time. Through the next few years,

8296-603: The end of the war. Meanwhile, in 1863, the Toggenburger Bank was founded in Lichtensteig, Switzerland with an initial share capital of CHF1.5 million. The Toggenburger Bank was a savings and mortgage bank for individual customers with a branch office network in Eastern Switzerland. In 1882, Toggenburger Bank opened a branch in St. Gallen in eastern Switzerland and began to shift its operations there through

8418-399: The financial crisis. Equity underwriting revenue ranged from 30% to 38%, and fixed-income underwriting accounted for the remaining revenue. Revenues have been affected by the introduction of new products with higher margins ; however, these innovations are often copied quickly by competing banks, pushing down trading margins. For example, brokerages commissions for bond and equity trading

8540-495: The financial crisis. Investment banks have become concerned that lenders are securitizing in-house, driving the investment banks to pursue vertical integration by becoming lenders, which has been allowed in the United States since the repeal of the Glass–Steagall Act in 1999. According to The Wall Street Journal , in terms of total M&A advisory fees for the whole of 2020, the top ten investment banks were as listed in

8662-493: The firm's settlement system in 1987. Then the bank lost £48 million as a result of Philips & Drew positions in the October 1987 stock market crash . Between April 1987 and February 1988, UBS was required to spend as much as £115 million to shore up Phillips & Drew. Phillips & Drew unit returned to profitability in 1992 after years of losses. UBS also expanded into West Germany, acquiring Deutsche Länderbank in 1986. In 1991, UBS made its first acquisition in

8784-508: The hedge fund quickly became the bank's largest client, generating US$ 15 million in fees for UBS. Union Bank of Switzerland sold LTCM a 7-year European call option on 1 million shares in LTCM, then valued at about US$ 800 million. It hedged this option by purchasing a US$ 800 million interest in LTCM and invested a further US$ 300 million in the hedge fund. Following the merger, Swiss Bank managers were surprised to discover

8906-416: The hopes that these clients will execute suggested trade ideas through the sales and trading division of the bank, and thereby generate revenue for the firm. With MiFID II requiring sell-side research teams in banks to charge for research, the business model for research is increasingly becoming revenue-generating. External rankings of researchers are becoming increasingly important, and banks have started

9028-456: The largest shareholder in UBS and attempted to force a major restructuring of the bank's operations. The battles between Ebner and UBS management proved a distraction to the bank in the mid-1990s. Looking to take advantage of the situation, Credit Suisse approached UBS about a merger that would have created the second largest bank in the world in 1996. UBS's management and board unanimously rebuffed

9150-407: The largest shareholder in UBS and attempted to force a major restructuring of the bank's operations. The battles between Ebner and UBS management proved a distraction to the bank in the mid-1990s. Looking to take advantage of the situation, Credit Suisse approached UBS about a merger that would have created the second largest bank in the world in 1996. UBS's management and board unanimously rebuffed

9272-526: The late 1960s and 1970s. All of IG Chemie's American assets were seized by the United States government under the Trading with the Enemy Act of 1917 . These assets, seized between 1942 and 1946, included bank accounts in six New York banks, and over 90% of the capital stock of General Aniline & Film Corporation (today GAF Materials Corporation , then part of the holdings of American IG). I.G. Chemie

9394-400: The majority of revenue (60+% in some years) brought in by "trading" which includes brokerage commissions and proprietary trading; the proprietary trading is estimated to provide a significant portion of this revenue. The United States generated 46% of global revenue in 2009, down from 56% in 1999. Europe (with Middle East and Africa ) generated about a third, while Asian countries generated

9516-455: The massive exposure to LTCM at UBS. Ultimately, UBS was unable to sell or hedge its interest in LTCM as its value declined in the summer of 1998. Investment banking Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance , such a bank might assist in raising financial capital by underwriting or acting as

9638-453: The merger of the Bank in Winterthur and the Toggenburger Bank to form Union Bank of Switzerland (UBS), Dr. Rudolf Ernst became the merged bank's first chairman in 1912. Following his resignation in 1941, he was elected as an Honorary chairman of Union Bank of Switzerland. Rudolf Ernst joined the Bank in Winterthur in 1895. He was also financial director of the City of Winterthur for 16 years. At

9760-450: The merger, Union Bank of Switzerland and Swiss Bank Corporation were the second and third largest banks in Switzerland, respectively both trailing Credit Suisse . Discussions between the two banks had begun several months earlier, less than a year after rebuffing Credit Suisse 's merger overtures. The all-stock merger resulted in the creation UBS AG , a huge new bank with total assets of more than US$ 590 billion. Also referred to as

9882-450: The merger, Union Bank of Switzerland and Swiss Bank Corporation were the second and third largest banks in Switzerland, respectively both trailing Credit Suisse . Discussions between the two banks had begun several months earlier, less than a year after rebuffing Credit Suisse 's merger overtures. The all-stock merger resulted in the creation UBS AG , a huge new bank with total assets of more than US$ 590 billion. Also referred to as

10004-430: The most common types of buy-side entities . An investment bank can also be split into private and public functions with a screen separating the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas, such as stock analysis, deal with public information. An advisor who provides investment banking services in

10126-421: The name of the bank in German. "UBS" ceased to be considered a representational abbreviation for the Union Bank of Switzerland after the bank's 1998 merger with Swiss Bank Corporation and is today considered a standalone brand. By the 1980s, the bank had undertaken a major push into the securities business internationally. The bank established a position as a leading European underwriter of Eurobonds and pulled off

10248-611: The open market, a highly regulated process by the SEC to ensure transparency is provided to investors. Therefore, investment bankers play a very important role in issuing new security offerings. Front office is generally described as a revenue -generating role. There are two main areas within front office: investment banking and markets. Corporate finance is the aspect of investment banks which involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A); transactions in which capital

10370-405: The other hand had a stronger retail and commercial banking business in Switzerland and both banks had notably strong asset management capabilities. After the merger was completed, it was widely speculated that a series of losses suffered by UBS on its equity derivative positions in late 1997 was a contributing factor in pushing UBS management to consummate the merger. It would become clear that

10492-405: The other hand had a stronger retail and commercial banking business in Switzerland and both banks had notably strong asset management capabilities. After the merger was completed, it was widely speculated that a series of losses suffered by UBS on its equity derivative positions in late 1997 was a contributing factor in pushing UBS management to consummate the merger. It would become clear that

10614-418: The plaintiff, Osmon A.G., and Sturzenegger & Cie.". Overruling objections by IG Chemie, the court ordered full production of the documents. The government fulfilled the order but the plaintiff filed another motion after the Swiss government prohibited H. Sturzenegger & Cie from transmitting the records. They said transmission of these records would violate Swiss penal law. Because they could not produce

10736-461: The proceeds were split between Interhandel and the U.S. government. As a result of the sale of GAF, at the time of its merger with UBS, Interhandel held substantial amounts of cash. The addition of the Interhandel's capital resources, which propelled UBS into the top spot among Swiss banks in 1968, also made UBS one of the strongest banks in Europe and helped fuel the bank’s further expansion in

10858-477: The process of monetizing research publications, client interaction times, meetings with clients etc. There is a potential conflict of interest between the investment bank and its analysis, in that published analysis can impact the performance of a security (in the secondary markets or an initial public offering) or influence the relationship between the banker and its corporate clients, and vice versa regarding material non-public information (MNPI), thereby affecting

10980-403: The proposed merger. Ebner, who supported the idea of a merger, led a major shareholder revolt that resulted in the replacement of UBS's chairman, Robert Studer. Studer's successor Mathis Cabiallavetta would be one of the key architects of the merger with Swiss Bank Corporation. On 8 December 1997, Union Bank of Switzerland and Swiss Bank Corporation announced an all-stock merger. At the time of

11102-403: The proposed merger. Ebner, who supported the idea of a merger, led a major shareholder revolt that resulted in the replacement of UBS's chairman, Robert Studer. Studer's successor Mathis Cabiallavetta would be one of the key architects of the merger with Swiss Bank Corporation. On 8 December 1997, Union Bank of Switzerland and Swiss Bank Corporation announced an all-stock merger. At the time of

11224-433: The refinery changing to Hereaus & Management. Nevertheless, UBS continues to issue gold bars via Argor-Heraeus which is famous for the unique kinebar holographic technology it uses to provide enhanced protection against bank gold bar counterfeiting. By 1962, UBS reached CHF6.96 billion of assets, narrowly edging ahead of Swiss Bank Corporation to become the largest bank in Switzerland temporarily. Through 1979, SBC

11346-442: The remaining 21%. The industry is heavily concentrated in a small number of major financial centers, including New York City , City of London , Frankfurt , Hong Kong , Singapore , and Tokyo . The majority of the world's largest Bulge Bracket investment banks and their investment managers are headquartered in New York and are also important participants in other financial centers. The city of London has historically served as

11468-408: The remaining 8,256 employees were outside Switzerland. The bank had total assets of nearly CHF578 billion and shareholders' equity of nearly CHF28 billion as of the end of 1997. In 1862, The Bank in Winterthur was founded in Winterthur, Switzerland, with an initial share capital of CHF5 million. The Bank in Winterthur operated primarily as a commercial bank, providing financing for

11590-586: The remaining stake in Aargauische Creditanstalt in 1919 that it had not acquired in 1913. Also in 1919, the bank acquired Commandit-AG Weibel & Cie. in Fleurier and William Cuénod & Cie. In 1920, UBS acquired Banca Svizzera-Americana with branches in Locarno and Lugano ; Unionbank Geneva and Banque Henry Rieckel & Cie., based in La Chaux-de-Fonds . Three years later, in 1923, UBS acquired

11712-601: The representative of the merger partner Toggenburger Bank. On the eve of World War II , UBS was the recipient of a large influx of foreign funds for safekeeping. During the war, the bank's traditional business fell off and the Swiss government became their largest clients. Still, unlike many of its peers, UBS's business lagged through much of the war. Decades after the war, it was demonstrated that Union Bank of Switzerland likely took active roles in trading stolen gold, securities and other assets during World War II. The issue of "unclaimed property" of Holocaust victims became

11834-480: The seizure of its U.S. assets. Shortly after the start of the U.S. involvement in the War, on April 24, 1942, the U.S. government seized General Aniline & Film (later GAF Materials Corporation ), an Interhandel subsidiary, and it was not until 1963 that the long-running dispute between Interhandel and the U.S. government was resolved. The shares in GAF Corporation were sold in a highly competitive auction in 1965 and

11956-646: The table below. Many of these firms belong either to the Bulge Bracket (upper tier), Middle Market (mid-level businesses), or are elite boutique investment banks (independent advisory investment banks). The above list is just a ranking of the advisory arm (M&A advisory, syndicated loans, equity capital markets, and debt capital markets) of each bank and does not include the generally much larger portion of revenues from sales & trading and asset management . Mergers and acquisitions and capital markets are also often covered by The Wall Street Journal and Bloomberg . The financial crisis of 2007–2008 led to

12078-614: The technology team, who are also responsible for technical support . Technology has changed considerably in the last few years as more sales and trading desks are using electronic processing. Some trades are initiated by complex algorithms for hedging purposes. Firms are responsible for compliance with local and foreign government regulations and internal regulations. The investment banking industry can be broken up into Bulge Bracket (upper tier), Middle Market (mid-level businesses), and boutique market (specialized businesses) categories. There are various trade associations throughout

12200-531: The third largest bank in Switzerland would catch up to its larger peers and by the 1970s surpass them in terms of size. UBS opened branches and acquired a series of banks in Switzerland growing from 31 offices in 1950 to 81 offices by the beginning of the 1960s. Throughout the 1950s, UBS was the most acquisitive bank in Switzerland, acquiring Banque Palézieux & Cie. (1948), Volksbank Interlaken (1952), Weck, Aebi & Cie (1954), Banque Tissières fils & Cie. (1956), Banque de Sion (1956), Banque de Brigue (1957),

12322-462: The time of its merger with UBS, Interhandel held substantial amounts of cash. The addition of the Interhandel capital, which propelled UBS into the top spot among Swiss banks in 1968, also made UBS one of the strongest banks in Europe and helped fuel the bank's further expansion in the late 1960s and 1970s. UBS consolidated four affiliated mortgage lenders and assumed their domestic retail operations. The bank further expanded into consumer lending through

12444-465: The trading cap — that are independent of client needs, even though these groups may be responsible for deal approval that directly affects capital market activities. Similarly, the Internal corporate strategy group, tackling firm management and profit strategy, unlike corporate strategy groups that advise clients, is non-revenue regenerating yet a key functional role within investment banks. This list

12566-408: The way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structurers create new products. Banks also undertake risk through proprietary trading , performed by a special set of traders who do not interface with clients and through "principal risk"—risk undertaken by

12688-605: The whole range of asset types. (In distinction, trades negotiated by market-makers usually bear standard terms; in market making , traders will buy and sell financial products with the goal of making money on each trade. See under trading desk .) Structuring has been a relatively recent activity as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities, so-called "yield enhancement". In 2010, investment banks came under pressure as

12810-689: The world which represent the industry in lobbying , facilitate industry standards, and publish statistics. The International Council of Securities Associations (ICSA) is a global group of trade associations. In the United States, the Securities Industry and Financial Markets Association (SIFMA) is likely the most significant; however, several of the large investment banks are members of the American Bankers Association Securities Association (ABASA), while small investment banks are members of

12932-421: The years prior to this, UBS acquired approximately 50% of Interhandel shares on the open market. Upon the announcement that Interhandel would receive $ 122,000,000 USD in compensation for the seized shares of the former I.G. Farben U.S. subsidiaries (GAF), a tremendous uplift in the value of the Interhandel shares was realised, allowing UBS to gradually take control and absorb the cash in a 1967 merger. The company

13054-489: The years, beginning as a partnership firm focused on underwriting security issuance, i.e. initial public offerings (IPOs) and secondary market offerings , brokerage , and mergers and acquisitions, and evolving into a "full-service" range including securities research , proprietary trading , and investment management . In the 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: In

13176-463: The young age of 36, he was elected in 1901 to the Board of Directors of the Bank in Winterthur and as its chairman at the same time. During his chairmanship, the bank changed its focus from its original lending business and began to expand its issuing and asset management franchise. With the acquisition of the Bank in Baden in 1906, the bank gained a branch in Zürich and a seat on the stock exchange, one of

13298-656: Was Schweizerische Bankgesellschaft and was known by the initials SBG. The original English name for the combined bank was the Swiss Banking Association, but it was later changed to Union Bank of Switzerland in 1921 to mirror the French form of the name: Union de Banques Suisses. The bank's logo, introduced in 1966, would later reflect both the German SBG and the English and French name UBS. UBS acquired

13420-496: Was a Swiss investment bank and financial services company located in Switzerland . The bank, which at the time was the second largest bank in Switzerland, merged with Swiss Bank Corporation in 1998 to become UBS . This merger formed what was then the largest bank in Europe and the second largest bank in the world. UBS was formed in 1912 through the merger of the Bank in Winterthur and Toggenburger Bank , both founded in

13542-837: Was a relatively "retail-focused" firm with a large brokerage network. Investment banking is split into front office , middle office , and back office activities. While large service investment banks offer all lines of business, both "sell side" and "buy side", smaller sell-side advisory firms such as boutique investment banks and small broker-dealers focus on niche segments within investment banking and sales/trading/research, respectively. For example, Evercore (NYSE:EVR) acquired ISI International Strategy & Investment (ISI) in 2014 to expand their revenue into research-driven equity sales and trading. Investment banks offer services to both corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on

13664-449: Was accused of participating in a conspiracy with I.G. Farben , which had by then been designated a German enemy corporation "...to conceal, camouflage and cloak the ownership, control and domination by I.G. Farben of properties and interests in many countries of the world, including the United States, other than Germany". The Swiss banking partnership Ed. Greutert & Cie (later Sturzeneggar & Cie, today Baumann & Cie, Banquiers )

13786-609: Was acquired by the Union Bank of Switzerland in 1967. Interhandel's predecessor, I.G. Chemie, was established in 1928 by the German company I.G. Farben as a Swiss holding company , located in Basel, Switzerland , to hold the company's foreign investments. The company owned a group of financial and industrial businesses in Europe and the United States, including American IG . By 1940, I.G. Chemie had severed its direct ownership from its parent company I.G. Farben in order to avoid

13908-515: Was also accused of involvement. IG Chemie, seeking to recovery its properties, filed a lawsuit on October 21, 1948. IG Chemie claimed that it was neither an enemy or ally of an enemy of the United States. As plaintiffs, the holding company filed a motion under Rule 34 of the Federal Rules of Civil Procedure for the discovery of documents from the government. A similar motion was filed by the government, "including documents of subsidiaries of

14030-414: Was billed as a merger of equals, resulted in UBS's shareholders receiving 60% of the combined company and Swiss Bank's shareholders receiving the remaining 40% of the bank's common shares. UBS's Mathis Cabiallavetta became chairman of the new bank while Swiss Bank's Marcel Ospel was named chief executive officer. However, it quickly became evident that from a management perspective, it was Swiss Bank that

14152-414: Was billed as a merger of equals, resulted in UBS's shareholders receiving 60% of the combined company and Swiss Bank's shareholders receiving the remaining 40% of the bank's common shares. UBS's Mathis Cabiallavetta became chairman of the new bank while Swiss Bank's Marcel Ospel was named chief executive officer. However, it quickly became evident that from a management perspective, it was Swiss Bank that

14274-410: Was buying UBS as nearly 80% of the top management positions were filled by legacy Swiss Bank professionals. Additionally, UBS professionals suffered more headcount reductions, particularly in the investment banking unit where there were heavy cuts in the corporate finance and equities businesses. The more severe cuts at UBS were an acknowledgment that prior to the merger Swiss Bank Corporation had built

14396-410: Was buying UBS as nearly 80% of the top management positions were filled by legacy Swiss Bank professionals. Additionally, UBS professionals suffered more headcount reductions, particularly in the investment banking unit where there were heavy cuts in the corporate finance and equities businesses. The more severe cuts at UBS were an acknowledgment that prior to the merger Swiss Bank Corporation had built

14518-493: Was consistently the largest of the three major Swiss banks by assets, except for short periods in 1962 and then again in 1968 when UBS temporarily moved ahead of SBC. After 1979, UBS would firmly establish itself as the largest Swiss bank. UBS would retain this position for the next 15 years until Credit Suisse leapfrogged into the top spot following its 1993 acquisition of Schweizerische Volksbank (Swiss Volksbank) and later Winterthur Group . UBS continued its rapid growth in

14640-456: Was formed through the 1969 merger of three German banks: Schroeder Brothers & Co., Muenchmeyer & Co. and Frederick Hengst & Co. (formerly known as Bank Siegmund Merzbach). During the mid-1990s, UBS came under fire from dissident shareholders, critical of bank's relatively conservative management and lower return on equity. Martin Ebner , through his investment trust, BK Vision became

14762-402: Was formed through the 1969 merger of three German banks: Schroeder Brothers & Co., Muenchmeyer & Co. and Frederick Hengst & Co. (formerly known as Bank Siegmund Merzbach). During the mid-1990s, UBS came under fire from dissident shareholders, critical of bank's relatively conservative management and lower return on equity. Martin Ebner, through his investment trust, BK Vision became

14884-558: Was in direct violation of a recent Swiss law adopted in December 1996 protecting such material. UBS acknowledged that it had "made a deplorable mistake", but an internal historian maintained that the destroyed archives were unrelated to the Holocaust . Criminal proceedings then began against the archivist for possible violation of a recent Federal Document Destruction decree and against Meili for possible violation of bank secrecy , which

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