UBS plots revamp of investment bank after performance falters

UBS is said to be discussing hundreds of investment banking job cuts. © Keystone / Ennio Leanza

UBS is preparing an overhaul of its investment bank as the Swiss lender seeks to galvanise earnings and cut costs after a drop off in performance over the past few quarters.

This content was published on September 5, 2019 - 09:10
Stephen Morris, Financial Times

As part of the revamp, due to be announced at a townhall on Thursday, executives are discussing hundreds of job cuts at the investment bank, especially within the higher ranks, as duplicate roles are cut after sweeping divisional mergers, according to people familiar with the matter.

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The bank’s main equities division will be combined with its smaller foreign exchange, rates and credit trading (FRC) operations to create a single securities and trading unit, said three people with knowledge of the changes. Jason Barron, head of equities, will run the unit alongside George Athanasopoulos, head of FRC.

On the advisory side of the business, Ros Stephenson and Javier Oficialdegui will be named global co-heads of investment banking, overseeing the bank’s M&A and capital markets activities around the world, they said. The division will be rebranded from corporate client solutions (CCS) and will introduce a global rather than regional structure as in the past.

Additionally, all debt and equity capital markets functions will be combined into one global unit for the first time and led by Brendan Connolly, formerly the head of leveraged debt capital markets.

Performance decline

Along with much of the industry, UBS’s investment bank has gone through a rough patch of late amid geopolitical tensions, low client activity levels and regulatory changes. These challenges have been exacerbated by the loss of high-profile dealmaker Andrea Orcel, who ran the unit between 2012 until his departure last September to become CEO of Santander, a move which eventually fell through.

The investment bank made a surprise $47m loss in the fourth quarter of last year followed by two quarters of sharp declines in year-on-year profits.

While better than many rivals, especially on the advisory side, it still prompted questions from investors and analysts about whether the bank had the right strategy. UBS’s stock has fallen 32 per cent in the past 12 months.

Mr Orcel’s successors, M&A banker Piero Novelli and trader Rob Karofsky, now almost a year into their roles, hope the changes will simplify the bank’s structure and drive earnings, particularly on the trading side, the people said.

Chief executive Sergio Ermotti’s overhaul of the investment bank closely follows changes made at UBS’s primary wealth management division, which last week recruited former Credit Suisse executive Iqbal Khan to address concerns about succession planning and lacklustre performance. 

Mr Khan will take over from Martin Blessing on October 1 as co-head of wealth management alongside Tom Naratil. Mr Blessing is leaving UBS.

Copyright The Financial Times Limited 2019

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