Randomly Noted

Sometimes, when you get yourself into a little trouble, it forces you to do some things you may not otherwise have done. Take the case of BankAmerica. Through various mergers over the years, it built up a pretty sizeable asset management division which became known as Columbia Management. But then along came the credit crisis, and some problematic acquisitions that weighed on BankAmerica. It had to raise capital, so, it sold Columbia to Amerprise Financial for $1 billion.

Today, Ameriprise reported second quarter earnings and it showed some good profit numbers in its asset management business, which had two months of Columbia’s performance included. The unit earned $56 million this quarter versus a loss of $12 million in the year-ago quarter. By no means was this the unit powering all of Ameriprise’s earnings (insurance, annuities and wealth management all had higher profits.) But it is clearly a profitable business, one creating millions of dollars of cash for Ameriprise – money you have to wonder if BankAmerica is now regretting it doesn’t have.

A firm like Morgan Stanley really operates in four basic businesses – wealth management, asset management, investment banking and sales & trading. The segment that offers the most volatility in terms of earnings/sales flow from quarter to quarter in sales & trading. And that’s exactly the segment that powered Morgan Stanley to a strong earnings showing today. And which likely led CEO James Gorman during an analyst conference call to temper expectations for the rest of the year.

The strongest area for Morgan Stanley in sales & trading came from equities, where the firm had $1.415 billion in revenues, essentially flat over the quarter before. But the firm believes it took market share from its rivals. Other highlights were in commodities trading and in its prime brokerage business. Its foreign exchange business saw higher revenues on “increased client flows.” This is the part of the forex business where Morgan Stanley executes, among other things, hedging strategies for customers like companies looking to minimize forex exposure.

Morgan Stanley did not give a lot of detail or color to any of its troubled asset portfolio other than to say it had net mark-to-market losses of $277 million. It didn’t say what kind of securities led to those losses.

It may have been an acquisition that made sense on paper. But the purchase of PaineWebber by UBS never really worked the way the Swiss bank had hoped. The bank, with a big private banking business in Europe, was looking for a springboard into the U.S. market. PaineWebber had a good brand and a strong foothold in the U.S. brokerage business. But the two never seemed to be a good fit – maybe it was the different cultures, the inability of UBS to move quickly and mis-steps like thinking the UBS name carried more clout in the U.S. marketplace than did PaineWebber, which it ultimately dropped.

Today, as has been rumored for the past month or so, UBS hired Bob McCann, the former head of Merrill’s brokerage, to run the UBS wealth management business in the U.S. The move likely signals a commitment to the U.S. market by the Swiss bank  – hard to imagine McCann would come to run a business up for sale. And you can’t blame people thinking it was given comments from UBS’ top brass recently that seemed to indicate it didn’t believe the U.S. wealth management business was core to its operations. Of course, it’s easy to see why they thought that – the top brass was very preoccupied with settling a nasty little tax evasion case with the U.S. government.

Which is all the more reason why UBS should bring back the PaineWebber name. McCann said earlier today that wasn’t under consideration. But that strong brand name can be built upon and it doesn’t evoke images of Swiss bankers hiding money in the basement to help others avoid paying taxes. So, bring it back so we and all the financial advisers can say “Thank you, UBS” (a play on the old “Thank you, Painewebber” ads of yesteryear.)

Newswires reporters Brett Philbin and Annie Gasparro had a nice article last week that looked at the storied past of the old Painwebber and how it lost ground to rivals like Merrill Lynch or Morgan Stanley/Smith Barney. See that piece below.

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