Tuesday, September 28, 2021

UBS Puerto Rico’s Downsizing Continues

By on December 17, 2015

Sheds Staff from Several Key Divisions

BY JOSÉ L. CARMONA

UBS Financial Services Inc. of Puerto Rico, the Swiss bank’s San Juan-based subsidiary, this week eliminated some staff from its Wealth Management Consulting, Closed-End Funds, Personal & Corporate Trust and Fiscal Planning divisions, plus some brokers—affecting fewer than 20 employees—as the local office continues to further trim its already diminished operations on the island.

“UBS Wealth Management Consulting was the most important division, as it was spearheading the firm’s local transformation. With the trimming of its staff , UBS Puerto Rico is basically left with nothing,” a source familiar with the matter told Caribbean Business.

UBS Wealth Management Consulting division handled institutional clients, such as insurance companies, credit unions, universities and important family conglomerates, to name a few, the source added.

“A year ago, UBS Puerto Rico announced a restructuring of our business, adapting to structural changes in the marketplace. As we continue to review and restructure our business, several employees left the firm this week. Decisions affecting people are always difficult and we thank them for their service and contributions,” Gregg Rosenberg, senior media relations officer for UBS Americas in New York, told Caribbean Business.

“UBS remains committed to Puerto Rico, our clients and our employees. We have maintained a strong presence and have been a part of the community on the island for half a century. We are and intend to remain an important part of this community through our continued work and support of various initiatives and events. There is nothing we take more seriously than our relationship with clients,” Rosenberg added. “We look forward to continuing to provide the highest level of service to our clients and serving the local community in the future.”

The UBS spokesperson noted no divisions were eliminated, but the local firm’s latest restructuring involved “adjustments in several area groups,” with fewer than 20 jobs lost.

DIMINISHED PRESENCE

The latest move comes amid a major shakeup in the firm’s local operations in October, which involved the elimination of the Investment Banking; Credit; Business Development; Marketing; and Government & Institutional divisions and the job termination of eight employees— including top executives and administrative staff .

Previously, the firm had shut down and relocated staff from its Condado (San Juan), Guaynabo and Ponce offices.

UBS Puerto Rico still maintains its main offices in International Plaza building on Muñoz Rivera Avenue—in San Juan’s Hato Rey financial district, plus a satellite office in Mayagüez, on the island’s west coast.

Last October, UBS Puerto Rico became a subsidiary of UBS U.S., with all the Puerto Rico business essentially being managed from the company’s New York office.

MILLIONS IN LOSSES

The continuing downsizing responds to the decrease in the firm’s assets and business. Assets under management slid from $15.4 billion in 2010 to $8.7 billion as of June 30, 2015.

UBS Puerto Rico has also been hemorrhaging clients on the heels of more than $3 billion in class-action lawsuits against the island’s largest brokerage firm from investors in the firm’s closed-end mutual funds (CEFs), which have lost millions as the value of Puerto Rico bonds declined after being downgraded to noninvestment grade.

Most of the firm’s tax-exempt funds, which UBS underwrote, are comprised of 70% Puerto Rico bonds in their investment portfolios.

Back in September, the Financial Industry Regulatory Authority (Finra), Wall Street’s industry-funded watchdog, announced it had fined UBS Financial Services Inc. of Puerto Rico $7.5 million for “supervisory failures related to suitability of transactions in Puerto Rican closed-end fund shares.”

Finra also ordered UBS Puerto Rico to pay about $11 million in “restitution” to 165 customers “who were forced to realize losses on their CEF positions.”

The Securities & Exchange Commission (SEC) also took action against UBS Puerto Rico in September for “the firm’s failure to supervise a former broker who had customers invest in CEFs using money borrowed pursuant to lines of credit.”

UBS Puerto Rico agreed to pay nearly $34 million to settle the SEC’s charges. The Swiss firm neither admitted nor denied the regulator’s allegations.

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