We warned you about Andrea Orcel. Not known for suffering fools gladly, there have long been fears that Orcel's arrival at UBS would be the catalyst for a shakedown in its investment banking business.
Those fears seem to have been realised. Orcel started in July and today it emerges that UBS is getting rid of nearly one fifth of its investment bankers in Europe. Most of the jobs are likely to go in London, before Christmas (and therefore before bonuses).
Bloomberg says UBS is getting rid of 90 investment bankers (M&A bankers, ECM bankers, DCM bankers) in total. Unlike Deutsche, which is also cutting corporate financiers but is focusing on getting rid of senior staff, UBS will be trimming across the ranks, says Bloomberg. And once it's cut some investment bankers, it will turn its attention to equities and fixed income.
In fairness, the cuts are not entirely down to Orcel. UBS announced 1,600 redundancies in its investment bank back in August 2011. It said it had already achieved these by the end of the 2nd quarter of 2012 and yet still made a significant loss. Our own calculations suggest UBS needs to make another 1,600 investment banking redundancies simply to break even. The bank suffers from stubbornly high non-compensation expenses and compensation costs reached 64% of all revenues in the first half.
UBS's investment bankers may nevertheless feel peeved that quite so many of them are going. Research by Nomura analyst Jon Peace, shown in the chart below, suggests the bank did comparatively well across IBD in the first half, particularly compared to rivals like JPMorgan at which redundancies have been far fewer.
As we've noted before, UBS bankers who want to keep their jobs under Orcel will need to demonstrate an impressive capacity for work: he's known for making calls at 5am and for wanting to know the details of everything his bankers are working on. He's also famously fiery, client focused and direct about the bottom line. “He’ll want to know what more everyone is going to do to make money and what more they’ll do for every client,” one former colleague said.
Separately, does anyone know the whereabouts of William Steward?
The UBS equity product controller credited with sniffing out Kweku Adoboli's alleged wrongdoing before anyone else - in August 2011, seems to have disappeared.
Whether voluntarily or not, Steward no longer works at UBS and doesn't appear to have resurfaced elsewhere.
Adoboli's communications with Steward are a reminder that product controllers can be treated discourteously by the traders they're trying to police. "The main problem going through July and August is that we were really really f*cking busy," complained Adoboli, attempting to justify the disparities in his book. "We had an annoying client which was taking up half my day plus we had all these client meetings and the market was going crazy, plus I was like a man or two down every."