Here are two things that you don’t hear every day, just almost every day: layoffs at UBS and not so hot supervision of trading at UBS.

Actually the good news is, strictly speaking, there were no new layoffs announced today, anyway:

The bank also announced an additional 300 job losses on top of the 1,575 already earmarked. The extra job cuts were expected to come through attrition.

But UBS’s natural shrinking is, as it’s previewed pretty extensively, part of its plan to move from being universal rogues to focusing on roguish wealth management:

The Zurich-based bank’s strategy will center on its wealth-management businesses and its position as the strongest universal bank in the Swiss market. To serve wealthy clients, some investment-banking activities are also essential, but they need to be less complex, absorb less capital and be profitable, UBS said. …

UBS plans to rid its balance sheet of 145 billion Swiss francs ($161 billion) by selling or running off risky assets. The biggest cuts come at the investment bank’s FICC unit—short for fixed-income, currencies and commodities—which absorbs a disproportionate amount of capital. Among other moves, UBS plans to exit its asset securitization business and will scale back its long-end rates businesses.

Fair enough. Getting rid of capital-intensive FICC trading and securitization businesses should definitely reduce risk, both of legitimate losses and of the less legitimate kind. (Maybe they can even dodge the MBS CDO fine bonanza.) Here’s a list of the planned cuts; various trading businesses are on the block, though there are apparently only “small cuts” planned to synthetic equity, which I’m assuming is a more PC name for Kweku Adoboli’s delta one.

So they’ll be left with wealth management, and businesses that closely support wealth management. And it’s not like there’s a lot of rogue trading you can get up to in wealth management. Right?

UBS suffered unauthorised trading on the Africa desk of its UK wealth management division in 2007 and initiated a root-and-branch review of its compliance procedures, a UK tribunal has heard. … [A] string of incidents occurred within UK wealth management, including a payment fraud, client-money reconciliation problems and misuse of client money.


Combined with UBS’s dicey recordkeeping in stock lending, which they’ll presumably keep around for their private clients’ portfolios, this is not encouraging for UBS’s efforts to wean itself from the thrill of rogue trading / not supervising anyone.

That said, the upside is that, if you’re a regulated bank, there’s actually only so much badness you can get up to with client money. It’s easy to lose a few billion dollars here and there gambling your own money; it’s harder to do with client money, and the numbers involved in UBS’s Africa PWM and stock lending businesses seem to be small, at least compared to Kweku’s katastrophe. Even MF Global – whatever the heck they did with their missing $600mm, they probably didn’t roll it into roguish prop bets, William Cohan notwithstanding.

But, as UBS has worked tirelessly to prove, if you put your mind to it you can lose money on rogue trading just about anywhere. And, as Jon Corzine will be happy to tell Sergio Ermotti, the downside is that losing a little bit of client money in unauthorized ways can work out much worse than losing a ton of your own money.

UBS Reveals Investment-Bank Plan [WSJ]

Fresh UBS rogue trading revelations [FT]

26 comments (hidden to protect delicate sensibilities)
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Comments (26)

  1. Posted by I'm a Dude | November 17, 2011 at 3:45 PM

    Matt, we dont understand what you wrote. please use the extra space on the back to explain your opinion

  2. Posted by guest off guest on | November 17, 2011 at 3:46 PM

    From that pic, Ermotti apparently knows how to pleasure the ladies…

  3. Posted by Eggshaped Excel File | November 17, 2011 at 3:55 PM

    Indeed, he's looking quite rougish in that picture, makes you wonder if he's part Hispanic.

  4. Posted by DSAS | November 17, 2011 at 4:06 PM

    Nice work, Matt. I actually read through the whole piece.

    Dude with Short Attention Span

  5. Posted by Guest | November 17, 2011 at 4:14 PM

    Matt, only you could make a Layoffs Watch more than a paragraph

  6. Posted by Alt_EST | November 17, 2011 at 4:15 PM

    I don't see what George Hamilton has to do with this.

  7. Posted by Serg | November 17, 2011 at 4:18 PM

    Spoken like an idiot without a passport. He will be from the
    italian region ( canton) of ch. They all look like that there, swarthy.
    There are no hispanics from europ, it's the very meaning of the word.

  8. Posted by Rick | November 17, 2011 at 4:26 PM

    Are there any people left at UBS to lay off?

  9. Posted by HAM05 | November 17, 2011 at 4:26 PM

    that is one amateur rapist looking to go pro if i've ever seen one

  10. Posted by 2_Small_2_Bail | November 17, 2011 at 4:47 PM


  11. Posted by derp | November 17, 2011 at 4:58 PM

    I don't always suck, but when I do… no, I always suck

  12. Posted by Anonymous | November 17, 2011 at 5:05 PM

    Kill yourself por favor.

  13. Posted by Guest | November 17, 2011 at 5:09 PM

    Yes.. I touch my lips. See how I do it?

  14. Posted by Guest | November 17, 2011 at 5:13 PM

    A *universal bank you say? Do they have any openings in fixed income in the Jupiter office?

    – Marvin the Martian, MD

  15. Posted by Eggshaped Excel File | November 17, 2011 at 5:13 PM

    Put another way all Hispanics look rougish but not all rougish looking men are hispanic?

  16. Posted by UBS HR | November 17, 2011 at 5:30 PM

    define people… what remains is a weird "humanic" hybrid of masochism and incompetence.

  17. Posted by Angelo Mozilo | November 17, 2011 at 5:35 PM

    I for one think he looks kind of creepy.

  18. Posted by Paulie MD | November 17, 2011 at 5:38 PM

    A bit pale, no?

  19. Posted by 2 22's in my shoes | November 17, 2011 at 6:11 PM

    glad to hear the trading desk is still fully staffed with penn history majors

  20. Posted by sfa | November 17, 2011 at 6:37 PM

    UBS is done. No one will respect that damn firm.

  21. Posted by delta one | November 17, 2011 at 6:47 PM

    that's the nite desk.

  22. Posted by 2StopShop | November 17, 2011 at 7:08 PM

    Vaginas perform cunnilingus on him. He is the world's most interesting man.

  23. Posted by Guestinho | November 18, 2011 at 5:02 AM

    The eyes say… but the smirk says… oh, hell, I can't, everything about him says CREEPY!

  24. Posted by Guest | November 18, 2011 at 9:42 AM

    america sucks

  25. Posted by Jimb | November 18, 2011 at 11:52 AM

    UBS FICC Asset Securitisation includes what? ABS/MBS or including CMBS?

    Does anyone know?

  26. Posted by dfdfd | November 18, 2011 at 12:45 PM

    Can we just die already

    – UBS MD