Tomorrow, at the latest, UBS's fixed income bankers will find out what befalls them. Rumour has it that Sergio Ermotti is - at this very moment, battling the storm to get to UBS's Stamford office where he will make an internal announcement about the fixed income restructuring and formation of a bad bank. Frankly, this seems unlikely, but Ermotti is certainly going to be obliged to say something soon.
If you work in fixed income sales and trading at UBS - or indeed at any bank - it's hard to see any upside in UBS's alleged fixed income pullback. UBS isn't commenting on the situation, but we'd thought/hoped that it might try to lock its fixed income people in with extra bonus payments while they wind the business down. Senior headhunters in London openly scoff at this possibility, however. UBS actively wants its fixed income bankers to go, says one: "UBS can't afford to pay redundancy packages to all these people. It's going to be a slow wind-down. Everyone will receive zero bonuses and UBS will hope that they then quit of their own accord."
Any surge in CVs coming out of UBS is going to be bad news for everyone else on the market. The economics of investment banking are now changing fast, says Ian Gordon, an analyst at Evolution Securities. "The most important read-across form UBS is that the cost dynamics are improving," says Gordon, "This is going to reduce the cost of people materially across the industry."
In other words, UBS's 10,000 potentially redundant staff are going bid pay down for everyone else.
There are some optimists out there. One headhunter who's close to UBS says he's interpreting the rumours as a good thing - UBS's fixed income bankers can spin out and live happily ever after in their own personal boutique, he suggests. Jon Peace, an analyst at Nomura says it's too early to call, but that, "the good news is that other banks will be able to pick up the market share that UBS leaves behind."
Who's most employable? - Hoornweg's faction? Or Misra's?
Who, at UBS, is most likely to get rehoused elsewhere?
To listen to some senior London fixed income headhunters, no one. "It's doomsday for them," says one. "No one's really hiring," says another, "the senior guys are going to call it a day - or maybe move to the buyside."
And yet, some elements of UBS's fixed income platform may hold more appeal than others. Several of the headhunters we spoke to pointed to long-running friction between Rajeev Misra's traders and Robert Hoornweg's salespeople. The two men are co-heads of UBS's fixed income business and allegedly don't get on. Misra was hired from Deutsche in July 2009; Hoornweg was hired from Morgan Stanley in February 2010. "It's very factional at UBS," claims one headhunter, "Misra and Hoornweg come from very different backgrounds."
Both men have been responsible for a lot of hiring, but Misra has hired the most. In 2010, UBS hired more than 420 FICC bankers, of whom 225 were MDs and only 72 were in FICC distribution. Headhunters claim Misra hired many of his former colleagues from Deutsche. People like Paul Levy, a former head of exotic credit structuring at Merrill Lynch were also parachuted in. Tellingly, Levy left UBS in March 2012 and now works for the new London office of Greensledge Capital Markets. Other UBS bankers may want to get in touch with Levy and see if he's hiring.
One headhunter says the most desirable people in UBS's fixed income business belong to Hoornweg's team. "Goldman and BAML rarely look at UBS people very favourably," he alleges, "they're just not particularly well-regarded, but the salespeople are generally preferred."
Another headhunter reels off a list of names, traders included. "If we were poaching from UBS's fixed income business now we'd be interested in Rajeev Misra, Robert Hoornweg, George Athanasopoulos (co-head of global FX), Chris Murphy (global head of rates) and Thomas Siegmund (head of FICC Asia)," he says.
Another points to the general desirability of Ian Slatter and all who work with him. Slatter, who was hired from JPMorgan in 2011, is co-head of FICC distribution at UBS.
It's not all bad for UBS's fixed income professionals insists the head of one search firm in London. "The market has picked up – there is a market for good people," he insists, without specifying which banks are actually hiring now.