Like Clockwork…UBS Posts Another Loss

To those who utterly can’t live without daily blog posts from me, I apologize for my lackluster performance of late. Unfortunately, my activities aren’t limited to making the occasional snarky comment about finance, and I had to attend to a few non-blog related affairs. But, fear not, I’m back.

I’ll confess that I myself was a bit fearful, actually. Away from the Internet for a few days, I wondered whether I’d be missing some earth-shattering development in the real world or at the very least, the blogosphere. That fear was quashed by UBS’ announcement today of yet another loss – its fourth straight quarterly hit for those keeping score.

See, UBS delivering negative numbers has become a matter of routine for the hobbled Swiss bank. I can’t say that I’m all that surprised by its adherence to such a habit. After all, the Swiss place an emphasis on predictability – they are the crafters of some of the world’s finest watches, and you wouldn’t want to have a clock that erratically displayed the time, would you?

While UBS clearly isn’t the Rolex of the Swiss banking market, the numbers from Zurich this quarter actually weren’t as bad as they’ve been in the recent past. Then again, when you drop almost $10 billion in a three-month span (as UBS did in Q4 of 2008), you haven’t exactly set the bar very high. Still, I am moderately surprised that the bank is even standing at this point. As if its $50 billion in write downs weren’t bad enough, UBS has found itself at the center of a damaging tax evasion scandal, for which it paid the U.S. government nearly $1 billion in fines. Even worse than forcing it to pony up cash to Uncle Sam, the tax debacle has led to massive outflows from the firm’s once platinum asset and wealth management arms. After suffering well over $100 billion of outflows last year, the bank has already seen customers remove an additional $90 billion through the first three quarters of 2009. This trend is particularly problematic because of the weakness of the bank’s trading arm and the increasing extent to which financial institutions will need to rely on more stable earnings streams (from enterprises such as asset management) going forward.

During the early stages of the credit crisis, when UBS’ investment bank was causing all the trouble, there had been calls to break up the firm to better realize the value of the asset management side. But now that the former crowned jewel of the UBS franchise has itself become a thorn in the bank’s side, I am not sure whether a break up would make sense. Even so, it’s clear that management must do something to right the ship. I may not have a Rolex, but even I know that the clock is ticking and executives are running out of time.