The UBS problems just prove the hubris inherent in the idea of a worldwide, universal financial institution that can lend, underwrite and advise, all under one roof. Sure, you can get such creations to work, but why? The gigantic, ponderous beasts aren’t necessarily all that profitable and can create problems of international proportions.
In finance, as in so many businesses, smaller is often better. In the case of UBS, it’s why selling or spinning off the U.S. retail business (that is, PaineWebber) could work.
Wednesday, August 13, 2008
Paine Webber Redux?
Reeling from derivatives losses and tax-shelter scandals, UBS ponders breaking itself up. At Investment News, Evan Cooper wonders if that could mean the return of Paine Webber, the venerable wirehouse UBS absorbed not that many years ago. Cooper also offers another reminder that in the financial industry, big can be bad:
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