UBS Throws In The Towel

May 3 2007 | 10:51am ET

While other investment banks are beefing up their hedge fund offerings, UBS is pulling the plug. The Swiss bank is shutting down its two-year-old hedge fund, Dillon Read Capital Management, after its 150 million Swiss francs (US$123 million) loss pushed profits down for the third straight quarter.

UBS Chief Financial Officer Clive Standish blamed the downturn in the U.S. subprime mortgage market, which “obviously weakened” its investments in U.S. mortgage-backed securities. CEO Peter Wuffli said in a statement that Dillon Read, named for Dillon Read & Co., a prominent New York investment bank acquired by a UBS predecessor in 1997, “did not meet our expectations.”

John Costas, the former investment banking chief who headed the unit, will stay on to shut Dillon Read down—which will cost the bank US$300 million—and will remain with the bank in an advisory role, Bloomberg News reports. The bank had set up the hedge fund in 2005 in an effort to keep Costas on staff. Dillon Read President Michael Hutchins will leave UBS, while most of the hedge fund’s other 250 employees will be transferred to the investment banking group.

UBS said that first quarter income fell to 3.28 billion Swiss francs (US$2.7 billion), down from 3.5 billion Swiss francs (US$2.9 billion) a year earlier.


In Depth

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

 

From the current issue of

Business Insider has been reporting on the unusual trading activity of a mystery trader who placed a profitable short equity bet to the tune of $21 million on the Aug. 10 move in the CBOE Volatility Index (VIX).