Something has occurred on UBS's London government bond desk. As we reported last month, Tim Hawkins and Alan King, both senior rates traders mysteriously disappeared. Now it seems that Renato Giust, the executive director who was heading European government bond trading at UBS in London, has gone the same way.
What has transpired? Despite suggestions that UBS has closed its government bond desk, we understand that this isn't the case at all. UBS's European government bond trading desk has merely been realigned with stronger UBS desks (like inflation swaps) and efficiencies have been created globally.
Nonetheless, there are unconfirmed suggestions that the UBS European government bond book is now being run by Mat Aashour, a trader who previously spent five years working for UBS in Australia, after Hawkins, King and Giust all left.
The exits follow some biggish hiring on UBS's macro desk in 2017. The Swiss bank recruited various rates and FX salespeople from Goldman Sachs last year. UBS's European rates sales business is run by Mark Tinworth, a popular salesman hired from Citi in 2015.
The 'efficiencies' on its European government bond desk follow a mixed first quarter for banks' macro desks. Rates traders did well at BofA, but less well at Citi and J.P.M, for example.
UBS isn't the first bank to trim its government bond desk. SocGen closed its London gilts desk altogether in 2016. Credit Suisse decided to stop being a primary dealer in London in 2015 - the same year Deutsche Bank stopped being a dealer for primary government bonds in Belgium. RBC previously cut its European government bond business in 2013.
Government bond trading is a capital intensive activity. Some banks are simply deciding it's simply not worth it - or are, at least, resizing their trading desks accordingly.
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