UBS takes hedge fund route

BANKING giant UBS has shaken up its board to create a new hedge fund trading division and merge its two huge wealth management divisions.

John Costas will step down as chief executive of the investment banking division and leave the main board to head the new hedge fund unit, Dillon Read Capital Management. It will have 120 staff, based in New York.

Huw Jenkins, the British-born global head of equities, will replace US-born Costas, who split his time between London and New York. Jenkins will join the main board and be based in London, where the bank employs 6000 of the group's 68,000 global workforce. Costas will remain non-executive chairman of the investment bank.

UBS will move its main finance business - trading off its own balance sheet - and commercial real estate business into the new unit, which group chief executive Peter Wuffli confirmed would be like a hedge fund.

He said: 'This business is a similar concept to other alternative asset management businesses. It will be based on trading strategies of the past. It will be opened up to coinvestment for sophisticated clients and will be accompanied by new strategies.'

Costas and other members of the division - which will be 100%-owned by UBS - will be able to co-invest in the business, meaning potentially far more lucrative rewards than from simply running an investment bank.

Wuffli said Costas had the idea for the new division. 'He expressed his desire for a change of career after leading the investment-bank for five years. He wanted to do something entrepreneurial,' he said.

The new division will report to UBS's global asset management business, led by chairman and chief executive John Fraser.

UBS is also integrating its two wealth management businesses under Marcel Rohner. Mark Sutton will become chairman and chief executive of the Americas while Raoul Weil, head of the international part of the wealth management business, will join the UBS executive board.

? Philip Yates, London-based global head of mergers and acquisitions at Merrill Lynch, has reportedly resigned because he did not want to move to New York. His children are at British schools and he did not want to leave his European clients without their chief adviser, reports said.