Aug. 3 (Bloomberg) -- UBS AG, which ousted its chief executive officer last month after three quarters of declining earnings, named Latin America Chief Andre Esteves to run global fixed-income sales and trading.

Esteves, 38, will move to London from Brazil and report to Huw Jenkins, head of UBS's investment bank, according to a memo sent to employees today. Simon Bunce, who has held the job since June 2005, is leaving UBS after 18 years to pursue other opportunities, the firm said. Doug Morris, a UBS spokesman in New York, confirmed the memo's contents.

UBS's fixed-income revenue has trailed rivals' since 2005, when the Zurich-based bank moved 120 employees from the division to a hedge fund unit called Dillon Read Capital Management. UBS said in May it was shutting Dillon Read at a cost of $300 million, after the fund lost money on sub-prime mortgage bonds. Chief Executive Officer Peter Wuffli was ousted in early July.

``It's very unusual to see a head of Latin American business go to run a global fixed-income business, but this shows that the best man got the job,'' said Michael Karp, chief executive officer of Options Group, an executive search firm based in New York. ``This appointment shows that the financial markets are truly global.''

Fixed-Income Weakness

Esteves, who will remain responsible for Latin America, takes over as high-yield debt and bonds backed by mortgages tumble in value. Bear Stearns Cos. Chief Financial Officer Sam Molinaro said today that the fixed-income market is the worst he's seen in 22 years.

``Andre brings strong execution and risk management skills to the role,'' Jenkins said in the memo. ``Under his leadership, with a renewed focus on swift implementation, I am confident we can achieve the ambitious step change in market position we are striving for.''

UBS, Switzerland's biggest bank, reports second-quarter earnings on Aug. 14. The bank will probably say revenue at its fixed-income unit, which accounted for almost a fifth of total income last year, fell 12 percent, estimates Standard & Poor's analyst Derek Chambers in London. Revenue at Zurich-based rival Credit Suisse Group's fixed-income unit rose 69 percent, while Frankfurt-based Deutsche Bank AG's debt-trading revenue rose 18 percent, the banks reported this week.

The sudden departure of Bunce may signal that the unit will report disappointing results next week, said Henry Higdon, managing partner of recruiter Higdon Partners in New York. ``I would expect bad news next week,'' Higdon said. ``Now we're going to see how many people make money in these markets, who are the really smart people.''

Brazilian Settlement

UBS named Esteves, a former managing partner at Banco Pactual SA, to run its Latin American businesses in May 2006. Esteves led efforts to sell Pactual to UBS for $2.6 billion. He became a managing partner at Pactual in 2002, and oversaw the fixed-income team from 1993 to 1996.

``It really doesn't surprise me given his outstanding qualities as a banker,'' said Winston Fritsch, who runs the mergers and acquisitions unit of Rio Bravo Investimentos that was acquired this month by Lehman Brothers Holdings Inc.

Esteves agreed last month to pay an unspecified amount to settle a Brazilian regulator's claim that two firms he oversaw before they were acquired by UBS improperly used currency and interest-rate trades to cut taxes.

Shares of UBS, the world's biggest wealth manager, have declined 11 percent this year to close today at 65.65 Swiss francs in Zurich. Shares of smaller Zurich-based rival Credit Suisse have dropped 6 percent, while Frankfurt-based Deutsche Bank's stock is down 2.9 percent.

To contact the reporters on this story: Christine Harper in New York at charper@bloomberg.net; Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net.

Last Updated: August 3, 2007 17:07 EDT