Everyone now knows that UBS is getting rid of its FICC business. 10,000 jobs are going between now and 2015. 2,500 will depart in Switzerland, with 7,500 disappearing in London and the US combined.
There are various problems associated with UBS's US redundancies. Reuters reported today that the bank accepted a $20m interest free loan from Connecticut state in the summer, on the proviso that it continues to employ at least 2,000 people in its Stamford office. Right now, UBS employs 3,000 people in Connecticut, many of whom are reportedly bond traders. Under the FICC wind-down, it would appear that a lot of these Stamford-based bond traders will be made be redundant. If so, UBS will be compelled to transfer some of its New York people to Connecticut to keep up the numbers....
On this side of the Atlantic, questions are being raised about what happens to the rest of UBS's investment bank once it's got rid of its FICC business. Financial News points out that UBS's primary debt capital markets business may prove unfeasible without a secondary trading business to disseminate its issuance. It also points out that UBS is getting rid of senior capital markets bankers as well as its salespeople and traders. Richard Luddington, vice chairman of global capital markets has been put at risk. So has Guy Reid, head of public sector debt origination at the bank.
In a further sign of disintegration, Financial News adds that Croda International, a broking client which has been with UBS for 40 years, has taken its business elsewhere (JPMorgan Cazenove) after UBS lost various of its relationship bankers.
The implication is that the damage from the FICC pullback is not being entirely contained.
In 2010, Pierre Henri Flamand, head of Goldman’s prop desk, spun out and created his own hedge fund. Yesterday it closed down due to poor performance. (Financial Times)
Deutsche Bank currently employs 10,000 people in the US. It’s just appointed a head of US corporate finance - Jacques Brand, to help build its business. (Financial Times)
Commerzbank still hasn’t accepted the notion that it needs to pay its former Dresdner employees €52m of bonuses. Next week, it will find out whether it can appeal the issue in the high court. (Financial News)
There has been poaching among accounting firms: Throgmorton has pinched a hedge fund tax expert from E&Y. (FinAlternatives)
This is the book you need to read if you think you want to go into management consulting. (WSJ)