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UBS mulls investment bank overhaul, drastic job cuts


People walk past a branch office of Swiss bank UBS in Zurich, Switzerland, on Jan. 27, 2017.

Photo: Reuters

Almost a year after taking over at UBS Group AG’s investment bank, coheads Piero Novelli and Rob Karofsky are working on their first shake-up of the business.

Novelli, who runs deals, is considering a reshuffle of his leadership as he and trading chief Karofsky seek to revamp a division that has posted volatile results in the past year, people familiar with the matter said.

Their plans could entail hundreds of job cuts, said the people, who asked not to be identified because the deliberations are not public.

The discussions are preliminary and a final decision has not been made, the people said.

UBS declined to comment.

The Swiss bank is seeking to boost collaboration between dealmakers and the wealth management unit, while sharpening a focus on industries most of interest to its richest clients. That approach has already been successful for the bank this year.

The business of advising clients on deals and stock offerings was a standout in the second quarter, after slumping 48 percent in the first three months of the year.

The rebound was helped by UBS’ role in advising on a string of large deals, including the spinoff of contact lens maker Alcon Inc from Novartis AG and Amcor PLC’s acquisition of packaging company Bemis.

UBS has also tapped into its network of wealthy clients. The firm’s investment banking unit has helped Asian families secure billions of dollars worth of investments in Manhattan properties.

The unit is also seeking to do more with private equity firms, pensions and sovereign wealth funds, adding talent from rivals.

Still, the unit’s 10 percent return on equity in the first half of the year was about half that of UBS’ other divisions.

The unit had 5,333 employees at the end of June.

Investment banks are cutting thousands of jobs as difficult trading conditions and a slowing economy weigh on revenue.

Deutsche Bank AG is eliminating 18,000 jobs, Societe Generale SA has announced 1,600 cuts, and Citigroup Inc is preparing to shed hundreds of positions in its trading division.

UBS promoted Novelli and Karofsky in September last year, splitting the role held by Andrea Orcel, who was set to join Spain’s Banco Santander as CEO only to see his appointment fall through after the Spanish bank decided he was too expensive.

The investment bank’s cohead structure mirrors that of the wealth-management business, which is run by former Commerzbank CEO Martin Blessing and Tom Naratil.

Like Orcel and Ermotti, Novelli is a former Merrill Lynch employee. He joined UBS in 2004, overseeing global mergers and acquisitions, and returned in 2013 after a stint at Nomura Holdings Inc.

Karofsky has helped expand equities and prime brokerage at UBS since joining in 2014 and previously worked at AllianceBernstein, Morgan Stanley and Deutsche Bank AG.

Novelli and Karofsky recently set up a new unit — called Private Capital Markets — to target a greater share of private transactions.

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