| SAO PAULO, March 7
SAO PAULO, March 7 UBS AG will restart
investment banking operations in Brazil as early as next week,
sources said, almost five years after Switzerland's biggest bank
sold its highly profitable securities unit there following the
global financial crisis.
Two sources, who are not authorized to speak publicly on the
matter, said on Friday that UBS and Brazil's central bank agreed
on setting March 12 as the date to activate the
Sought for comment, UBS said it would continue to focus on
wealth management, client solutions and its sales and trading
business, including equity research, in Brazil.
UBS lost its investment banking license in 2009 after
selling Banco UBS Pactual back to its original owners, a group
led by billionaire financier Andre Esteves. The sale price
of$2.5 billion was about $600 million less than what the Swiss
lender paid for the unit in 2006.
Months after the UBS Pactual buyback, Esteves created Grupo
BTG Pactual SA, which is now Latin America's largest
independent investment bank.
UBS's Brazilian unit is unlikely to prospect for new
investment banking clients before receiving authorization from
its parent in Zurich, one of the sources said. The team has 16
bankers and could hire two or three more, the source noted,
adding that the unit will probably not lend money in order to
win investment banking business.
UBS is also trying to expand its financial advisory business
in Brazil despite Chief Executive Officer Sergio Ermotti's push
to focus on wealth management globally and limit the use of
lending to fetch deals.
The license, which took three years to be approved, comes at
a time when foreign investment banks are losing ground to their
local counterparts amid sluggish capital markets activity in
Brazil since 2011.
Some of UBS's foreign rivals have been reducing the size of
their Brazilian units because of almost four years of weak
growth, rising costs and flagging deal flow.
Goldman Sachs Group Inc cut its roster of investment
bankers in Brazil to about 20 from 45 a year ago, while Barclays
Plc and Deutsche Bank AG reduced its
research, sales and trading staff as competition mounted and
business faltered, sources told Reuters.
UBS itself plans to give up one floor of its office space in
Sao Paulo's upscale Faria Lima financial district, one of the
The other source said UBS at some point had held talks about
forming a joint venture with state-run Banco do Brasil SA
, the nation's largest lender. The Brasilia-based
bank, which declined to comment, has struggled for years to
start a full-fledged investment-banking unit.
Limiting loans in Brazil should help UBS reduce risk-taking
and leverage after it had global trading losses of more than $50
billion in the aftermath of 2008's financial crisis.
The company has been cutting fixed-income operations and
returning to its private banking roots. For example, it has
formed a wealth management unit in China.
In January 2013, UBS completed its takeover of Link
Investimentos, a brokerage specialized in equities and
derivatives trading, and integrated it into its Brazilian wealth
According to one of the sources, UBS is counting on the
brokerage unit to attract new business in investment banking,
which will mainly cater to the company's wealth management