(Corrects spelling in second paragraph in story that was originally published on Dec. 1, 2010.)
UBS AG, Switzerland’s largest bank, plans to double its commodities team, a year after selling most of its raw-materials units to Barclays Plc.
The expansion of the existing team of about 40 people will take place over the next 18 to 24 months, Hana Dunn, a London- based spokeswoman for the bank, said by phone today. Dylan Morgan, formerly of Goldman Sachs Group Inc., started last week as head of industrial metals and Taha Ouertani, from Tudor Investment Corp., became head of agriculture, Dunn said.
The Zurich-based bank announced plans to withdraw from most commodities business in October 2008 and agreed to sell its industrial metals, oil and U.S. power and gas units to Barclays Plc three months later. UBS sought to cut investment banking risk after posting $48.6 billion in writedowns and losses related to the credit crisis.
UBS Chief Executive Officer Oswald Gruebel “has got no worries about going back on something they did before,” said Christopher Wheeler, an analyst with Mediobanca SpA in London. “He’ll just do what he thinks is appropriate to take the business to a sustainable level of profitability.”
Commodity assets under management rose $19 billion to a record $340 billion in October, led by demand for index-linked investments, Barclays Capital said in a report last month. The S&P GSCI Total Return Index (SPGSCITR) of 24 raw materials, tracking the net amount investors received, rose 17 percent since the end of May. That compares with a 12 percent gain for the MSCI World Index of equities and a 3.8 percent return for Treasuries.
UBS, which has about 65,000 employees worldwide, will handle trading in agriculture, industrial metals, oil and gas for clients, according to an e-mailed statement today. It will also trade energy derivatives and continue to operate commodity indexes and a precious-metals business.
Shares (UBSN) of the bank rose 47 centimes, or 3.1 percent, to 15.5 Swiss francs at 5:19 p.m. in Zurich trading. That pared this year’s decline to 3.4 percent and put the company’s market value at 59.4 billion francs ($59.2 billion). The stock earlier advanced as much as 3.5 percent, the biggest gain compared with intraday prices since Sept. 1.
“Our expansion into flow trading, in areas such as agriculture, will leverage and complement what already exists inside UBS,” Jean Bourlot, head of commodities at the bank, said in the statement.
Flow trading describes the short-term purchase or sale of products on behalf of a client without any intention of holding the product or assuming a risk position. Bourlot, former head of agriculture trading at Morgan Stanley, started working for UBS in August and reports to Neal Shear, global head of securities.
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