UBS AG’s Chief Financial Officer Tom Naratil will meet next week with Knight Vinke Asset Management LLC, an investor that called for a spinoff of the lender’s investment bank, two people familiar with the matter said.
Naratil talks with dozens of investors every quarter to get feedback and discuss developments, the people said, asking not to be identified because the matter is private. The meeting was reported by the Wall Street Journal earlier today. Officials for UBS and Knight Vinke declined to comment.
Knight Vinke, based in New York, said in an open letter to shareholders before UBS’s annual general meeting earlier this month that ownership of the investment bank, which “nearly destroyed UBS” during the financial crisis, could be transferred to employees and managers, while the job of reducing investment-bank assets could be contracted out.
In 2011, a $2.3 billion loss from unauthorized trading at the unit led to the exit of former Chief Executive Officer Oswald Gruebel, three years after the bank received a government bailout to ward off a collapse. UBS, now led by CEO Sergio Ermotti, said last year after a strategy review it would focus on money management and exit most debt trading at the investment bank to boost profitability and reduce risks.
UBS had considered a sale of the investment bank before deciding on the current strategy. A sale of the assets that the bank is cutting may prove difficult because those assets are complex, according to the people.
Knight Vinke, led by founder Eric Knight, targets large, publicly traded companies and seeks to recruit other institutional investors to press companies’ management to change course. In 2007, the firm said that HSBC Holdings Plc, Europe’s largest bank, misled investors about a new share plan payable in 2008 to reward management.
UBS last month posted first-quarter earnings that exceeded analysts’ estimates. The investment bank reported a 92 percent gain in pretax profit to 977 million francs ($1 billion). That was more than triple the average analysts’ estimate of 321 million francs. The unit had a pretax return on equity of 49.5 percent for the quarter, up from 17 percent a year earlier.
Knight Vinke has said it holds about 1 percent of UBS.