The Swiss behemoth has been knocked down a peg or three. Is now the time for its private banking talent to make a swift exit?

Not according to headhunters, who say (surprisingly, perhaps) that UBS’s legions of private bankers have yet to pick up the telephone and negotiate a swift exit to the likes of Vontobel or archrival Credit Suisse.

“These write-downs are not a reason to leave UBS,” says Christian Sulger Buel, at private banking headhunter Sulger Buel & Co. “UBS remains the strongest private bank in the world.”

Indeed, according to another headhunter (who’s in the pay of UBS), the Swiss bank’s revelation that it’s simultaneously writing down a further US$10bn in US sub-prime mortgage investments whilst raising $11.5bn by selling convertible bonds to the Government of Singapore Investment Corp. and an unidentified Middle Eastern investor is – perversely – promising for its private bankers.

“What they have done is to ensure their tier-one capital is at sufficient levels to protect the asset and wealth management businesses,” he says. “The detriment in the short and medium term will be to the investment bank, which won’t receive the same level of investment.”

Bloomberg confirms this with a quote from UBS chief exec Marcel Rohner, who apparently says that from now on the bank will reposition its investment banking unit by taking less risk and making [those wayward investment bankers] work more closely with the asset and wealth management divisions – all of which sounds good if you’re a private banker.

However, headhunters say the real moment of truth will come when UBS unveils the enormity/paucity of this year’s private banking bonuses: “People will start calling headhunters if their bonuses suffer because of this,” says Sulger Buel.

Given that UBS now expects to make a full-year loss, telephones may soon be ringing.

The good news, however, is that our own calculations suggest that at the end of Q3, compensation and benefits expenditure for the average employee of UBS’s wealth management and private banking division was up 12% on the previous year.

The bad news is that Credit Suisse allocated an additional 24% to its private bankers over the same period.