According to the newspaper, which quoted persons familiar with the situation, it will close the majority of its municipal bond issuing business, leading to personnel reductions, the exact nature of which is unknown.
UBS is one of the top twenty underwriters of US municipal bonds. The biggest bank in Switzerland brought back state and municipal bond issuance in 2017, employing personnel after the firm had stopped doing so during the financial crisis.
Recent issuance activity has decreased, and Republican lawmakers have criticised UBS for its fossil fuel holdings. Texas retaliated against the bank for allegedly boycotting oil producers by abstaining from UBS muni bond issuance. As a result, UBS loses access to one of the most profitable marketplaces in the nation.
According to the memo from UBS Global Wealth Management executives, “We will reposition our resources to focus on where we see increasing client and advisor demand and shift our business away from the solicitation of negotiated new issues and instead pursue alternative solutions to access the new issue market.”
Approximately 80% of long-term municipal bonds issued in the US are negotiated agreements, which entail a borrower consulting with an investment bank before to a transaction.