ZURICH Swiss bank UBS UBSN.VX will outsource its fixed-income trading platform to two French software companies in an attempt to save costs and weather tougher regulation in the industry, a source with knowledge of the matter said.
UBS will replace its host of platforms in its rates and credit trading business with standardized technology from Murex and Ion Trading, the source said. This comes after the Zurich-based bank unveiled a three-year plan to withdraw from parts of fixed-income trading late in 2012.
Global investment banks are rethinking their operations and, in most cases, shrinking their businesses due to a regulatory drive to make markets less risky and a reduction in banks trading for their own account.
Fixed income units, which encompass foreign exchange and commodities as well as debt and bond trading activities, are particularly vulnerable to the sweep of regulatory change aimed at preventing another financial crisis.
A spokeswoman for UBS declined to comment on Monday. Murex and Ion Trading were not immediately available for comment.
"The move to outsource is in line with UBS's strategy for their fixed-income arm and with the streamlining of fixed income as whole," said Rainer Skierka, an analyst at J. Safra Sarasin, who has a buy rating on UBS stock.
Societe Generale (SOGN.PA), France's No. 2 listed bank by value, has also outsourced back-office operations to Accenture as part of a drive to save costs.
An unexpected fourth-quarter loss at Deutsche Bank (DBKGn.DE) underscored the challenges facing banks with large debt-trading divisions.
(Corrects second paragraph to show UBS is not exiting rates and credit trading)
(Reporting by Alice Baghdjian and Oliver Hirt in Zurich, Lionel Laurent in Paris and Aashika Jain in Bangalore; Editing by Louise Heavens and Erica Billingham)