BANKS’ URGE 2 MERGE
Troubled Swiss banking giant UBS has held preliminary talks with Wachovia Securities about forging a joint venture of the pair’s North American wealth-management units, The Post has learned.
Such a venture would combine UBS’ wealth-management shop, which has more than 8,000 retail brokers in the US, with Wachovia Securities’ 16,000 financial advisers.
Wachovia was acquired late last year by Wells Fargo.
The combination could be similar to a partnership formed between Citigroup’s Smith Barney and Morgan Stanley to combine their respective wealth-management operations into a 20,000-strong behemoth.
It’s unclear at what stage the discussions are in, or exactly what form a joint venture might take. One source warned a deal might never materialize.
A UBS spokeswoman declined to comment. A Wells Fargo spokeswoman directed calls to a Wachovia Securities spokeswoman, who declined to comment.
If an agreement is reached, it could enable UBS to cut costs at its US wealth-management unit, which the bank acquired 10 years ago when it bought PaineWebber for $10 billion.
That deal enabled UBS to break into the US retail brokerage market, but it has struggled to become profitable, said Alois Pirker, a financial analyst at Aite Group.
“The PaineWebber merger was a big mismatch,” he said.
Sources said a brokerage joint venture also would help UBS ramp up quickly its assets under management, which have dwindled to $609 billion in the its most recent quarter from $738 billion a year earlier.
Indeed, UBS has been slammed by the credit crisis, as well as how it marketed auction-rate securities, the latter of which has triggered a series of state investigations into whether investors were duped into buying these forms of short-term debt.
That bad publicity has wrecked havoc on the Swiss firm’s vaunted wealth-management franchise, which typically caters to the uber-rich.
Any deal between Wachovia Securities and UBS would be complicated because Wachovia six years ago crafted a similar partnership with Prudential Securities, which owns 38 percent of Wachovia Securities.
UBS shares fell $1.06 to $11.39, Wachovia parent Well Fargo rose 33 cents to $19.23.