The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

More than 70 UBS (Bahamas) will be impacted by the closure of its private banking unit over the next 10 months, with the Swiss banking giant promising the Government it would “minimise” local lay-offs.

UBS’s head office confirmed to Tribune Business, following inquiries by this newspaper yesterday, that “economic viability” had prompted it to “decommission” its Bahamian private banking business, UBS (Bahamas). Staff were informed yesterday.

The news sparked immediate ‘doom and gloom’ in the Bahamian private sector, one source describing the Swiss banking giant’s pending downsizing as “a big blow” for both the Bahamian financial services industry and wider economy.

“That’s a big, big thing,” one source familiar with developments told Tribune Business on condition of anonymity. “I understand it’s a fair chunk of employees, and they are highly paid. It’s a major blow.”

UBS (Bahamas) executives could not be reached for comment on the move, but Ryan Pinder, minister for financial services, moved rapidly to put a ‘positive spin’ on the bank’s move.

He told Tribune Business that UBS would retain a strong presence in the Bahamas, and was seeking to grow and expand its trust and fund administration businesses.

This, Mr Pinder added, would enable UBS to retain some of the impacted private banking employees in the Bahamas, while others will be offered posts elsewhere in its global network.

The Minister told Tribune Business that the Immigration Department’s recent detention of a senior UBS (Bahamas) executive, Emmanuel Fiaux, had “absolutely nothing to do” with the bank’s move.

He explained that the Swiss bank was “restructuring” its Bahamian operations as part of a global strategic review and, in a bid to provide reassurance over the financial services industry’s future, pointed to other local institutions that were expanding.

However, the downsizing by such a ‘blue chip’ financial services name will add to the perception in some quarters that the Bahamian financial services industry is continuing to slowly ‘slip slide away’ or shrink - a trend sparked by the 2000 ‘blacklisting’ aftermath and exacerbated by the recent global recession.

Tribune Business was told by informed sources that more than 70 staff will be impacted, as UBS (Bahamas) winds up its operations, and the bank’s reference to “economic viability” hints the move may have been driven, at least in part, by this nation’s relatively high operating cost base.

Yves Kaufmann, a UBS spokesman, confirmed: “UBS Group decided to downsize its presence in the Bahamas after a detailed assessment of its international locations.

“Based on considerations of economic viability, UBS Group has decided to decommission the Bahamas subsidiary, UBS (Bahamas).”

It added quickly: “This decision does not affect the Bahamas-based entity UBS Trustees (Bahamas)

“The wind-down process is expected to be completed by the end of 2014. Clients will be offered the option to transfer their assets to other booking centres within UBS Group or to their preferred service provider. A plan is in place for affected employees, and a considerable number staff will be offered employment in other roles and locations across UBS Group.”

No specifics were given on how many UBS (Bahamas) bankers might have to be made redundant, and Tribune Business understands that the institution itself does not know yet.

Contacted by this newspaper after it was tipped to the UBS (Bahamas) situation prior to the bank’s official statement, Mr Pinder confirmed he had met with the bank’s Swiss-based chairman and local chief executive yesterday morning.

The meeting had “gone over their strategic plan”, and Mr Pinder told Tribune Business: “They are reorganising their operations in the Bahamas, and they plan on expanding the trust side, the fund administration side, and the products and services offering side of their business.

“They are looking to expand that, and see that as a tremendous value-added to their business globally. They will serve their global network from the Bahamas.”

Mr Pinder indicated that the private banking exit was motivated by global considerations, with UBS joining those financial institutions seeking to extract cost savings and efficiencies through consolidation and the closure of non-core businesses.

“They do have constraints on the private banking side, and are reorganising those operations,” the Minister added. “They are transferring, to the extent they possibly can, personnel from the private banking side to the trust side.

“We have a commitment from UBS to work with the Government to minimise redundancies, and to help those affected find jobs with other institutions.

“They’re offering placement globally, and it all depends on who takes them up on that offer.... The commitment to the Government is to mitigate the domestic effect to Bahamians as much as possible.”

Mr Pinder acknowledged the “volatile environment” in which the financial services industry was operating, and said it would prompt some institutions to downsize and consolidate.

Yet others were expanding, the Minister telling Tribune Business: “I met with another institution, a significant player, who advised they have grown headcount by 15 per cent in the last six months, and are looking to grow by another 7-8 per cent in the next six months as they expand globally on their platform.”

He declined to name the provider, but Mr Pinder added that Andbank (Bahamas) had recently doubled in size, while two Latin American-headquartered institutions were also looking to expand their Bahamian operations.

He added that the UBS (Bahamas) situation did not involve an “immediate transition”, with any lay-offs set to be spread over the next 10 months.

But, however it is portrayed, UBS (Bahamas) move to exit private banking will likely be viewed by many as a blow to the image of, and confidence in, the Bahamian financial services industry.