With UBS likely to announce sweeping job cuts over the next few weeks, staff at the bank are said to be feeling understandably anxious.
"People at UBS are very nervous," says one structured credit headhunter. "The feeling is that at worst they will get axed, and that at best they'll be paid atrociously this year."
Structured credit and fixed income teams at UBS are likely to bear the brunt of any cuts after the Swiss bank announced a further $19bn of writedowns on its US subprime mortgage-related holdings earlier this week, taking the total so far to $37bn.
And according to Seeking Alpha, there may be even more cuts to come.
"The job cuts we've seen at UBS already have just been the start of the process," says Simon Adamson, an analyst at research firm CreditSights. "Most of what they've been doing so far has been dealing with the losses and the writedowns, but they are now looking at a broader strategic review."
That strategic review is likely to see the bank pulling back on proprietary trading and structured credit, in favour of client-orientated businesses."They are stressing that they want to be a client-focused firm rather than one that takes proprietary risks," says Adamson.
Structured credit - not much to cut
According to one headhunter, UBS's London-based structured credit business remains largely untouched. "The cash CDO and CDO of ABS teams have gone from around 10 to around eight people in Europe, while in the US they've gone from about 25 to five," he says.
Even if the team is cut to the bone, UBS is unlikely to achieve spectacular cost savings. "They only have around 18-20 people in total in consumer asset securitization, residential mortgage finance and principal finance in London - it's not the size of Merrill at its peak, or Deutsche," adds the headhunter.
For this reason, the head of one search firm in London says cuts will need to be broader:
"Everywhere will be hit. There will be another 5-10% of cuts across the board."
Structured credit professionals who lose their jobs won't be without options. Ted Tracey, of search firm Clifden Partners, says some banks want to capitalise on the talent available in the market and build out their structured credit platforms. Banks rumoured to be hiring include NAB and Standard Chartered.