Management believes that the banking model is broken at UBS.
UBS, a dishevelled Swiss bank, announced on August 12th that it was stepping away from its integrated model and establishing its investment-banking, wealth-management and asset-management divisions as stand-alone entities. UBS’s management scoffs at the idea that this will lead to the sale of the investment bank, but a break-up is precisely what many inside and outside the bank think is needed. The problem, they say, is that big banks like UBS and America’s Citigroup have got the wrong model.
However, even banks like Northern Rock, with simple models have fallen down.
What separates the winners from the losers is not models, but management.
Even though, the best captain [management] cannot save a sinking ship [broken business model]; the importance of a good management must not be overlooked.
When looking for companies to buy and invest in, one must look at both -- management's long term competency and long term prospects of the business model. One should only invest when both are on sound solid footing.
