Union Bancaire Privee Revamps Operations, Cuts Hedge Fund Exposure

Osmond Plummer

25 March 2009

Union Banque Privée, the Swiss private bank which specialised in alternative investments, has reduced its exposure to hedge funds after suffering a difficult few months from the Bernard Madoff fraud and as many managers failed effectively to protect against market losses.

The bank’s reported moves to cut back its hedge fund exposure have been confirmed to WealthBriefing.

“A year ago the typical client exposure to hedge funds would have been about 30 per cent. Now it is nearer 10 per cent to 15 per cent with a corresponding increase in cash,” a spokesperson for UBP said.

This is a significant development as the bank did have over 50 billion invested in hedge funds at the end of last year.

But the change does not mean UBP is turning its back on hedge funds. “As the industry is changing so is the bank’s policy,” the bank said.

UBP now insists on separating the roles of manager, administrator and custodian as a prerequisite for placing a fund on their recommended list and the bank is strengthening internal controls.

The bank will also hire a new head of research – as reported on 13 March - and strengthen internal risk controls.

Meanwhile, Edgar de Picciotto, founder and main shareholder of the bank, has become more involved in its management, taking on a more hands-on role in an effort to retain clients and restore the bank’s reputation.