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 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 investment-banking license.
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 <BBTG11.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 <GS.N> cut its roster of investment bankers
in Brazil to about 20 from 45 a year ago, while Barclays Plc <BARC.L>
and Deutsche Bank AG <DBKGn.DE> reduced its research, sales and
trading staff as competition mounted and business faltered, sources
told Reuters.
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UBS itself plans to give up one floor of its office space in Sao
Paulo's upscale Faria Lima financial district, one of the sources
said.
The other source said UBS at some point had held talks about forming
a joint venture with state-run Banco do Brasil SA <BBAS3.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 management operations.
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 clientele.
(Editing by Lisa Von Ahn)
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