Really nasty job cuts come to private banking

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It's happened. After escaping most of last year's scything of employees, private bankers/wealth managers are now being selected for mass removal.

It emerged over the weekend that UBS is detaching itself from 5,000 managers, of whom up to 2,500 will be located in the wealth management division.

Helvea analyst Peter Thorne says the writing was on the wall when Oswald Gruebel materialized from Credit Suisse last month.

"Gruebel said from day one that additional cuts were needed and what he says goes," says Thorne. "It's a different view of what's happening. The [wealth management] industry needs to recognize that assets have gone."

Thorne's prognostication for surviving UBS wealth managers isn't great either: "If you look at assets management, they're back to the levels they were at in 2004 and since then UBS has added 10,000 people in wealth management and asset management. You could live with that if you expected a massive rebound in the market. Gruebel clearly doesn't."

Other private banks are experiencing similar issues. "It's a major profitability problem," says pb headhunter Christian Sulger Buel. "Before the crisis a managed account had a return of 120 basis points, today it's 20 basis points and assets under management have fallen 30-40% and are mostly in cash. Banks will have to adapt to this sooner or later."

But headhunters say there's still hiring at ML, Fortis, Rothschild, Hoare and Co. and Deutsche - said to be looking at growing its UK wealth management arm.

Financial News reports today that UBS private bankers were put out because their bonuses were small and that there's general enthusiasm for joining RBC, which is also expanding in wealth management.