UBS is stuck in limbo right now as it decides what to do with its investment bank, according to a couple of sources familiar with the firm.”All decisions are on hold,” says a source at the firm.
Two examples of canned plans are evident in the news: The firm broke off an arrangement with the World Trade centre recently. Our source says the bank had been negotiating with the WTC for a new building, but now, “all decisions are on hold. They’re cancelling everything” for now.
Another decision on hold: the i-bank’s new headquarters in London.
The Financial Times obtained a confidential letter that i-bank CEO Carsten Kengeter wrote to Jeremy Hunt, the UK culture secretary, via the FOIA, that talks about the plans:
The decision to list the 1980s Broadgate office as a complex of special architectural interest will result in “serious consequences” for UBS and the City. It would force the bank to “fundamentally reconsider our occupation strategy in London.”
UBS was considering demolishing 2 Broadgate buildings to build a new i-bank headquarters. But now they won’t be allowed to demolish the buildings if they’re listed as a place of architectural interest.
There might be more to all this.
We’ve heard a couple of rumours that UBS might be splitting off its investment bank from its private bank, or moving its base out of Switzerland because of stringent banking regulations, for example, super high capital requirements.
Moving the i-bank out of Switzerland is still on the table, says our source at the firm. But so is shutting it down to create some sort of boutique bank, and/or dramatically changing the way it trades, “it would no longer trade Treasuries,” says our source, for example.
He cites some hints of the investment bank’s moving entirely out of Stamford as an example, saying that the equities unit might not be the only one moved to New York. The entire Stamford operation might be “stripped down,” he says.
Two things are for sure.
1. UBS is taking a lot of hits lately, much of which is being attributed to problems in the investment bank. Today the stock price hit 52-week lows.
2. “Huge layoffs are coming at the investment bank.” Last month estimates were that around 5,000 would be laid off.
Our two UBS sources don’t really know what’s going on. No one does, one says. “They’re re-evaluating everything” and “all decisions are on hold.” He adds, “the investment bank is f&cked.”