UBS Overhauls Structure, Offers Investors Extra Cash

UBS (NYSE:UBS) is making changes to its structure so that it can reduce risks in a crisis, creating a group holding company that will allow it meet different international regulatory demands and reduce capital requirements.

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Since the reorganization will reduce the amount of money UBS sets aside for losses, the company will be paying a special dividend. UBS will also become eligible for a capital rebate from Swiss “too-big-to-fail” requirements.

“We are substantially enhancing the resolvability of UBS in response to evolving global regulatory requirements,” says Axel Weber, Chairman of the Board, in a statement.

UBS also reported first-quarter earnings, with net income rising 7% from a year earlier, to 1.1 billion Swiss francs ($1.2 billion). Analysts were expecting 905 million francs ($1 billion).

The increase in profit was largely due to cost-cutting measures and a lower tax rate. UBS faced profit declines in its investment banking, wealth management and asset management divisions.

UBS investment banking, which has faced obstacles due to its high-risk debt-trading business, saw its profit fall 56% to 425 million francs ($487 million).  Wealth management fell 7% to 619 million francs ($709 million), however profit rose 24% in the Americas region. Profit also declined 36% in the global asset management business, coming in at 122 million francs ($140 million).

UBS shares are up half a percent on Tuesday, trading around $21. Shares are up 17% in the past year.