UBS will close its stand-alone hedge fund unit, Dillon Read Capital Management, and return about $1.5 billion to outside investors in the third quarter, confirmed spokesman Doug Morris. DRCM also manages about $2.9 billion in corporate assets, which will be returned to the bank. DRCM was created in June 2005, but operating a trading platform outside the investment bank and managing client money alongside became too complex and expensive, John Fraser, chairman and CEO of UBS Global Asset Management, said in a news release.
UBS will integrate Dillon Reads 250 employees into its investment banking operations, although some layoffs are possible, Mr. Morris said. John Costas will remain chairman of Dillon Read through June and will then assume a senior advisory role to the banks board, Mr. Morris confirmed. The move will result in a $300 million restructuring charge.