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UBS managed assets fall
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August 22, 2000: 3:32 a.m. ET
Client losses, weak markets lop 3% off assets under management in Q2
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LONDON (CNNfn) - Swiss bank UBS AG, set to become the world's top private banking organization with the purchase of Paine Webber Group Inc., said Tuesday the value of its assets under management fell 3 percent in the second quarter as clients shifted money to other money managers.
The decline in funds to 1.71 trillion Swiss francs ($998 billion), in line with analysts' expectations, was partly due to the negative market performances and currency fluctuations, although there were also net outflows of client funds in both the private client and institutional divisions. In institutional asset management, clients withdrew a net 20 billion francs, leaving total assets in that division at 525 billion francs at June 30.
"The decline in assets under management over the quarter was mainly driven by negative market trends and anticipated client losses in the institutional asset management business," UBS said in a statement.
Europe's third-biggest bank announced plans in March to shake up its asset management business, merging its London-based Philips & Drew fund management unit, which has lagged industry rivals in terms of recent investment performance, with U.S.-based Brinson Partners.
P&D investment chief axed
The merger was accompanied by the departure of Tony Dye, the controversial chief investment officer at P&D, as institutional investors sought culprits for the disastrous performance of pension funds managed by P&D.
In private banking, where managed assets stood at 683 billion francs at the end of the second quarter, as investors withdrew a net 3 billion francs. However, UBS said its investment fund activities saw net inflows of money.
The combination of UBS and Paine Webber will have $422 billion in private client assets, far ahead of its biggest rivals in individual fund management, such as Swiss neighbor CS Group and Germany's Deutsche Bank.
Basel, Switzerland-based UBS said it was optimistic for 2000. Last month it reported second-quarter net profit of 2.05 billion francs, up 138 percent from a year earlier excluding divestments and one-off provisions.
"If market conditions remain consistent, the group expects to maintain its strong performance relative to last year," UBS said in a statement.
The company also said it was selling Solothurner Bank, a Swiss regional bank, to Baloise Insurance, for an undisclosed sum.
Shares in UBS fell 4.50 francs, or 1.7 percent, to 259 at the opening in Zurich. 
--from staff and wire reports
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UBS
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