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BLS 465- Assignment #7

BLS 465- Assignment #7 - • In 2009 the investment-banking...

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Nick Connolly BLS 465 Dr. Meyers 09/19/2011 Assignment #7 UBS Bonuses at Risk After $2.3B Trading Loss UBS, which is Switzerland’s largest bank is unsure whether they will make a profit in the third quarter of this year due to a trader loosing over $2.3 billion making authorized trades. As a result, “It’s pretty clear there are going to be a lot of people who are not going to get bonuses.” Steven Hall Even before the huge trading loss, the CEO had already announced to cut around 3,500 jobs mostly from the investment-banking sector. This was due to an estimated 33% profit loss in the first two quarters of the year Essentially, the bank was planning on cutting jobs and not giving out bonuses, and this $2.3 billion trading loss is what they’re going to use as their reasoning.
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Unformatted text preview: • In 2009, the investment-banking sector tried to hire and take more risk to up their profits, but unfortunately the economy fell on hard times and the bank ended up a $57.1 billion pretax loss instead. • “They won’t be able to justify bonuses without profitability.” This is an effect of UBS introducing clawback provisions, which permit banks to pay out bonuses when units or the whole turn out to be unprofitable. • UBS has seen new lows in client activity, which is making it very difficult for them to turn a profit without more capital coming into their hands. http://www.bloomberg.com/news/2011-09-18/ubs-bonuses-at-risk-as-2-3-billion-trading-loss-erases-profit.html...
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