On April 21st 2008, UBS (UBS), with shares down more than 50% in the past 52-weeks, has finally begun talks with activist investor, and former UBS chief executive, Luqman Arnold. Mr. Arnold, currently heading up Olivant Advisers Ltd., a London based investment firm, believes that significant changes to both the structure of UBS and the director mix are necessary to boost shareholder value.
Mr. Arnold has been pushing UBS to split its investment bank from its private banking arm, in order to focus on core competencies and distance itself from the credit crisis – which has caused UBS to write-down more than $35 billion in bad debt. UBS has resisted the call for the separation of its investment bank arm thus far, but with increased shareholder pressure, thanks to Mr. Arnold, that may not last much longer.
In another sign of hope for shareholders, longtime Chairman Marcel Ospel was forced to resign after UBS rose to the top of the list on bad bet write-downs. Mr. Ospel was seen as a dominating force in the boardroom and his departure opens the door to significant changes.
UBS will not only separate its investment banking arm, but will move quickly to restore confidence in the company. Activist shareholders like Mr. Arnold are incredibly important instruments of change, and its to his credit on seeking solutions that boost shareholder value.