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Dillon, Read & Co.
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Dillon, Read & Co. was a prominent American investment bank from the 1920s into the 1960s.
Dillon Read originated in 1832 as the Wall Street brokerage firm Carpenter & Vermilye. However, it is best known for its actions during the 1920s. During that time Clarence Dillon managed the rescue of faltering Goodyear Tire & Rubber Company, engineered the buyout (in 1925) and subsequent sale of Dodge Motors (in 1928) to Chrysler, launched the first post-war closed-end investment trust (in 1924), and led the largest-ever stock offering (in 1926).
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Encyclopedia
Dillon, Read & Co. was a prominent American investment bank from the 1920s into the 1960s.
Dillon Read originated in 1832 as the Wall Street brokerage firm Carpenter & Vermilye. However, it is best known for its actions during the 1920s. During that time Clarence Dillon managed the rescue of faltering Goodyear Tire & Rubber Company, engineered the buyout (in 1925) and subsequent sale of Dodge Motors (in 1928) to Chrysler, launched the first post-war closed-end investment trust (in 1924), and led the largest-ever stock offering (in 1926). By the end of the decade, Dillon Read was considered to be an investment-banking powerhouse, alongside J.P. Morgan & Co. and Kuhn, Loeb & Co..
Dillon Read was purchased by Swiss Bank Corporation (SBC) in 1997 and merged with London-based investment bank S. G. Warburg & Co. (purchased by SBC in 1995) to become SBC Warburg Dillon Read. The merged entity, in turn, became part of UBS AG when the latter firm bought SBC.
The Dillon Read name was dropped by 2000 but recently re-emerged in the name of UBS's internal hedge-fund division, Dillon Read Capital Management (DRCM). During its brief 18-month existence, DRCM launched a successful fund of $1.2 billion (which was over-subscribed by 50%) for outside investors which returned 16.6% after fees, making it one of the top multi-strategy funds for 2007. On May 3, 2007, UBS announced the closure of Dillon Read Capital Management due to "operational complexities." DRCM had a loss of $124M in UBS proprietary accounts in the first quarter while the external hedge fund was profitable. According to Bloomberg, "In 2006, the fund, which invested in U.S. Treasuries, currencies, investment-grade corporate debt and mortgage securities, earned $720 million in pretax profit, after fees, on revenue of $1.2 billion, according to a person familiar with the figures." During 2007 after UBS took over the proprietary positions in May of 2007 losses grew to " 16% of the $19 billion in losses UBS recorded." The April 2008 report by UBS to the Swiss Federal Banking Commission (SFBC, in German: Eidgenössische Bankenkommission, EBK, in French: Commission fédérale des banques, CFB) stated that UBS claimed while there was liquidity through the summer of 2007 that " by October 2007 that the assets could not be sold given the illiquidity in the market.". Myret Zaki in the book, UBS: les dessous d'un scandale, asserts that had UBS listened to Dillon Read Management regarding the mortgage crisis that 99% of UBS' losses would have been avoided.
See also
Works about Dillon Read
- UBS quarterly earnings' disclosures:see UBS website-www.ubs.com, investor relations
- UBS:les dessous d'un scandale , by Myret Zaki
External links
- of 18 April 2008 (PDF), summary of UBS's report to the Swiss Federal Banking Commission (SFBC), includes the role of Dillon Read Capital Management in UBS
- , NZZ article of 21 April 2008 summarizing the report
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