There’s a funny line mentioned offhandedly in a Bloomberg story about the uncertain future for most bankers with UBS on their resumes -“There are some very good people at UBS and they will be in demand. But for many there’s nowhere to go.”
Unfortunately there’s a lot of truth in that quote from Jason Kennedy, the CEO of London-based recruiter the Kennedy Group.
Upcoming job losses at the investment bank are a reality.
And because UBS’ investment bank was an up and comer, for many, having it on their resumes won’t help them get jobs the way, say, having Goldman’s investment bank on their resume would. (After a quick survey of one recruiter and a handful of friends in the business, the consensus is that having Goldman on your resume is like having Harvard on it, while having UBS on it is like having Duke after the sex scandal on it. Actually, the recruiter said a worse school.)
That would have made it a fantastic place to work if UBS had grown into a top-tier investment bank like CEO Oswald Gruebel and Carsten Kengeter planned. Top bankers would have been applauded had it been a success-story.
But new regulations and the economic outlook made those plans difficult. There was speculation that Gruebel planned to announce a downsize to the investment bank in November.
Now add the rogue trader scandal to that. Kennedy also said, “As soon as the news about Delta One came in, [resumes] from UBS started flying.” It’s not a pretty picture for the investment bank.
Now that the CEO has resigned, it sounds like it was Gruebel’s plan to downsize the investment bank, but not eliminate it, might be out the window. That leaves many investment bankers’ jobs up in the air because of pressure coming from the Swiss government.
The Swiss parliament had piled pressure on the nation’s biggest banks in the wake the rogue trading, as a centre-left party pushed for a ban on risky investment banking and a plan to raise capital requirements passed the lower house.
Social Democrat lawmaker Susanne Leutenegger Oberholzer narrowly failed to get enough support for her proposal to reopen debate on tough new capital measures for UBS and Credit Suisse so that a ban on investment banking could be added.
The pressure to eliminate investment banking or subject themselves to higher capital requirements than other countries would have made it difficult for Gruebel to implement his plans, a source told Reuters.
That sounds like terrible news. Gruebel’s plans were to downsize the investment bank.
The former CEO had pushed for an ‘integrated bank” model which meant investment bank would be part of the business. The source said the investment bank could help facilitate the core wealth management business of the Swiss bank.
(That’s close to what Gruebel said at the last quarterly conference call: that about 50-75% of the ibank was necessary to support wealth management.)
So if downsizing the investment bank so that it could be integrated into UBS to support the wealth management unit came under pressure from the Swiss government… You might guess that moving or shutting down are at least 2 options for UBS’ investment bank to seriously consider.
At least under Gruebel, it was clear that some investment bankers would have kept their jobs.
Now the future of the ibank is unclear. Kengeter, the head, is faced with political challenges from the Swiss government, where UBS is headquartered and based. The Swiss are pushing for higher capital requirements on its banks, which make stem the profitability of investment banks.
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