In theory, senior risk managers who can help banks with model validation are hot property. A surge in regulatory demands has meant that investment banks have been scrambling to hire quantitative risk managers, and front office expertise – particularly structuring – has been seconded across to meet demand.
However, at UBS in New York, some of the most senior risk professionals in this area have been quietly moved on. And, recruitment sources suggest, this is down to juniorisation of the ranks.
Paul Shotton, deputy head of portfolio risk control and head of group risk methodology at UBS, left the bank earlier this year and has recently signed up to CRISIL Global Research & Analytics. The firm provides research and risk analytics to both banks and buy-side firms. Shotton has joined as global head of risk and analytics.
Shotton is a big figure in the model risk management space. He was responsible for the oversight of all market and credit risk taken in UBS’s investment bank, wealth management and asset management businesses. Before joining UBS in October 2008, he was global head of market risk management at Lehman Brothers in New York.
Meanwhile, Nikolai Kukharkin, global head of model risk management and control at UBS in New York, has also departed, according to recruiters with knowledge of the move. Kukharkin has been with UBS since 2003, having joined from J.P. Morgan’s risk model validation team, where he was a VP. He has yet to land at a new employer.
Specialist risk recruiters suggest that recent senior departures at UBS are down to a ‘delayering’ of senior quantitative risk managers at the bank, with expensive managing directors being displaced in order to both save on costs and provide opportunities for directors in the group.
These senior departures at UBS come at a time when demand is picking up for senior risk professionals with an understanding of model validation.
Model validation is an increasingly hot area in investment banking as firms deal with the requirements of Basel IV regulation, which stop them frm using their own risk models for calculations of credit risk. Instead, the regulations are pushing for increased standardisation, meaning that those with the quantitative ability for middle office validation are increasingly in demand.
Barclays has been hiring in this area. Patrick Chen, the former global head of the model review group at Morgan Stanley, joined Barclays as a managing director in New York. He spent eight years at Morgan Stanley, joining from Lehman Brothers, where he was global head of credit risk. Chen follows Eduardo Canabarro, the global head of risk analytics at Morgan Stanley, who joined Barclays in May last year as global head of model validation in New York.