UBS’s FICC bankers have had a confusing few weeks. One moment they were happily employed - the next they were barred from getting into the office. Thereafter, they were becoming accustomed to redundancy, when some among them were suddenly invited back to work. The confusion is being compounded by an apparent lack of clarity over who’s working for the core and non-core parts of the fixed income business in future.
Two weeks after the initial shock, UBS’s unwanted FICC staff still haven’t been made conclusively redundant. Headhunters and insiders tell us they’re still on ‘special leave’ – a kind of limbo while the bank gets its redundancy process together. We understand that redundancies proper should take place before Christmas. In the meantime, they’re still getting paid.
Sadly – and perhaps unsurprisingly given the lack of clarity - it seems some of the special leavers are clinging to false hopes of an imminent return to UBS.
‘Andrea Orcel [CEO of UBS’s investment bank] is taking a new proposal about the shape of the investment bank to the board in Zurich today,” says one headhunter who’s been talking to UBS’s unwanted. “Orcel is proposing an emerging markets-light and a leveraged-loans light sales and trading business – UBS wouldn’t be using much balance sheet and so this would be working at the liquid end of the market.
“At the moment, most of the leveraged loan sales and trading platform are on special leave, along with a lot of the EM desk,” he adds. “If Orcel’s proposal is accepted, they may be taken back.”
Sounds promising? Unfortunately, we’re given to understand that it’s just wishful thinking. UBS declined to comment, but one insider said there are unlikely to be any big changes in strategy at this stage. “98% of our business is crystal clear. There’s a lot of internal lobbying, but we’re not planning to make many changes. Orcel cannot keep going to the board with different proposals,” he says. There are rumours that rather than being in Zurich meeting the board, Orcel has in fact been in Hong Kong.
Moreover, it seems UBS’s recent decision to recall some of the bankers who were on special leave applied to hardly anyone. A handful of people were recalled according to insiders. Further recalls aren’t ruled out, but they too are likely to apply to far fewer than 10 people.
Jon Peace, European banks analyst at Nomura says none of UBS’s official announcements about its investment bank have indicated that there are “significant further options on the table.” However, Peace adds that the precise shape of the business remains unclear: “We’ve been given the RWA and ROE target but at this stage, no one knows how they will back into revenues at different divisions.”
UBS is expected to reveal the level of investment banking management below Orcel and his lieutenants over the next few days. Last week, we reported that Eric Lafon, co-head of EMEA fixed income, had left while Ian Slatter, his fellow co-head was staying. In fact, it seems both men are staying, although the position of neither was clarified in Orcel's memo to staff on the structure of the bank last week.