Once upon a time, UBS was like a happy family where hardworking employees occasionally slept under their desks. So said a tearful Kweku Adoboli in court this morning. Not any more. Now the harmonious environs of Broadgate Circle are being disrupted by the dual forces of declining markets and a power battle at the top.
First of all, CEO Sergio Ermotti sent a memo to the effect that his big investment banking strategy of last November had been superannuated by recent events and that the market environment has completely changed. Thousands more redundancies are expected.
Secondly, Andrea Orcel, the reputedly quite Machiavellian co-CEO of UBS's investment bank, who was hired in from Bank of America in July, appears to be consolidating his power-base. Bloomberg reports today that Carsten Kengeter, Orcel's co-CEO, may soon have his role reduced and that Orcel may soon have his role increased. As we have noted, Orcel has been upgrading UBS staff and hiring former colleagues from Bank of America. If Kengeter is diminished there may be much more of this in 2013.
Separately, the Wall Street Journal has an interesting article about a man who got out of investment banking and bought himself a bike. 35 year-old married ex-Morgan Stanley VP-level investment banker Matt Wolf has left the bank with no job lined up in order to, "spend the next few months coasting solo on his motorcycle from New York to South America," says the WSJ. Wolf's only plan is reportedly to ride about, "crashing at hostels and campsites and exploring job opportunities in the emerging markets." He ultimately intends to do something more entrepreneurial.
Kweku Adoboli chokes up, says that the fact that he once worked in the back office didn’t facilitate his alleged fraud. (Guardian)
UBS is said to have cut 50% of staff in its LA and San Francisco offices yesterday. (Dealbreaker)
20% of people on Wall Street will not be getting a bonus for 2012. (WSJ)
Credit Suisse’s near-threefold surge in trading revenues from fixed income, currencies and commodities from a year ago was thanks mostly to the stimulants dished out by central banks. (Financial Times)
Most investment banks have a cost income ratio of 70%. Credit Suisse’s is 80%. (BreakingViews)
Credit Suisse seem to continue to believe that running an investment bank at 40x leverage is a viable option. (Alphaville)
Private equity is coming back to life: KKR and Blackstone have both turned profits. (Dealbook)
Nomura’s supposed to be focusing on Japan, but it’s losing its grip on providing Japanese M&A advice. (Bloomberg)
London hedge fund EQI has hired a Deutsche Bank executive for securities lending. (FinAlternatives)
Things slow at the office? Remind your employees that they’re going to die. (QZ)
If you allow someone to form an accurate first impression of you, they will like you more. (Peerreviewedbymyneurons)
I am senior partner at Ernst & Young, I stammer,I don’t care. (CityAm)