Financial History Issue 130 (Summer 2019) | Page 39
risked being left behind because of its
focus on the retail brokerage business,
which has become increasingly competi-
tive with the advent of low-cost online
trading.” In 2000, J.C. Bradford & Co.,
a Nashville brokerage house founded in
1927, bought PaineWebber Group, Inc.
(J.C. Bradford bought the Almstedt Broth-
ers brokerage house in 1979). That year,
the firm agreed to a purchase by UBS AG,
a Swiss bank.
UBS AG (2000)
UBS AG was the result of a 1998 merger
between the Union Bank of Switzerland
and the Swiss Bank Corporation. It traces
its history back to the Bank in Winterthur,
which was founded in 1862 and merged
with Toggenburger Bank, founded in 1863
in Lichtensteig, in 1912 to form the Union
Bank of Switzerland. The Swiss Bank Cor-
poration traces its history back to the
Balser Bankverein, which was founded
in 1872 in Basel. PaineWebber became
the retail brokerage arm of UBS and was
renamed UBS PaineWebber in 2001. In
2003, UBS renamed the brokerage divi-
sion UBS Financial Services and the Paine
Webber name was lost to history.
Donald Marron, CEO and Chairman of Paine Webber, announces at a
press conference that Paine Webber will merge with UBS, July 12, 2000.
called PaineWebber Incorporated and
created a parent holding company called
PaineWebber Group Inc.
Marron said in 1986 that he hoped to
“propel Paine Webber into the ‘bulge
bracket’-Wall Street argot for the top five
or six investment banking houses that
garner most of the major deals.” But by
1987, The New York Times reported that
he was “scaling back his vision” for the
firm. After the firm suffered setbacks dur-
ing the 1987 stock market crash, the firm
began to sell some of its operations to
other firms, starting with its commercial
paper operation to Citicorp in November
1987 and its venture capital unit in January
1988. It was bought by the unit’s manag-
ers. It also sold 18% of its equity interest to
Yasuda Mutual Life Insurance Company
in November 1987 and used the capital to
buy Manufacturers Hanover Investment
Corporation in 1988 in an attempt to move
into merchant banking, though that was
ended soon after.
In 1994, the firm moved to build up its
investment banking services and bought
Kidder, Peabody & Co. from General
Electric Co., which gained a 25% stake in
PaineWebber. That year, Joseph J. Grano
Jr. succeeded Marron as president of
PaineWebber Group. He had been the
head of the firm’s retail unit since 1988.
Marron became chairman and CEO. The
following year, amid rumors that the firm
would be sold, Marron wrote a letter
to PaineWebber employees stating, “We
continue to be staunchly independent and
are proud of our heritage as one of the
very few such firms left in our industry.”
According to the Wall Street Journal,
the merger of Morgan Stanley Group Inc.
and Dean Witter, Discover & Co. in 1997
put enormous pressure on PaineWebber.
The paper reported, “The deal underscores
PaineWebber’s quandary: as its major US
brokerage rivals have become bigger and
have diversified into investment banking
and other financial services, PaineWebber
Susie J. Pak is an Associate Professor in
the Department of History at St. John’s
University (New York). A graduate of
Dartmouth College and Cornell Uni-
versity, she is the author of Gentlemen
Bankers: The World of J.P. Morgan
(Harvard University Press), a Trustee of
the Business History Conference, co-chair
of the Columbia University Economic
History Seminar and a member of the
editorial advisory board of the Business
History Review. She is also a member
of the Financial History editorial board.
About Where Are They Now? The “Where
Are They Now?” Series traces the origins
and histories of 207 of the underwriters of
the 1956 Ford Motor Company IPO. The
research for this series has been generously
funded by Charles Royce of The Royce
Funds. The Museum’s “Where Are They
Now?” blog can be found at: wherearethey-
nowblog.blogspot.com.
www.MoAF.org | Summer 2019 | FINANCIAL HISTORY 37