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UBS Investment Bank Will Be Profitable- Eventually....Most Likely

Much like the Cubs, the UBS Investment Bank's rallying cry seems to be 'wait til next year' in terms of when the unit will bring home a profitable quarter. As virtually every other major IB was making money hand over fist in FICC trading last quarter, UBS focused its attention on charging up the league table in lawsuits. The (current) CEO Oswald Gruebel recently highlighted just how bad things have become.

"We had virtually nothing, no revenues from credit trading, which was the biggest performer in the last quarter."

But the news isn't all terrible. Based on CFO John Cryan's comments regarding when profitability will return, the concept of the why firms hedge may have finally made its way to the Swiss bank.

"I was asked this by the board, and I likened it to predicting the weather in the U.K.," he said. "You can predict it for about the next half an hour, but you can't predict it for much longer than that."

If Jefferies is done plundering, and the IB can go more than 3 weeks without having to pay up for new senior management hires, they might be able to drop the second derivative loss rhetoric and reacquaint themselves with a color other than red.


UBS's Investment Banking Head May Have To Slash His Own Expenses "Like A Jewish Shopkeeper"

As those of you keeping up with the many trials and travails of UBS know, the last couple years have been fairly brutal for investment banking chief Carsten Kengeter. Pre-tax IBD profit was down 55 percent YoY through June, employees are constantly on his ass about getting paid, the comments he made in attempt to "rally the troops" re: "slashing expenses like a Jewish shopkeeper" were totally taken in the wrong way, some guy perpetrated a $2 billion fraud (which was partially to blame for CK getting passed over for the promotion he was gunning for), and to top it all off, the higher-ups actually accepted his offer to forgo a bonus for 2011, which he would never have put out there if he thought they'd actually go for it. And now, as a thanks for all his hard work, management is publicly mulling the idea of lightening his load and paycheck. UBS is weighing a shakeup at the top of its investment bank that would give a reduced role to Carsten Kengeter and increased responsibilities to his co-head Andrea Orcel, three people with knowledge of the matter said. The board is meeting in New York today to consider a reorganization of the unit that will include cuts centered on the fixed-income operations that Kengeter has been responsible for since 2008, said the people, who asked not to be identified before the matter is made public. An announcement may come when UBS reports third-quarter earnings on Oct. 30, they said...Three senior executives who declined to speak publicly said they expect Kengeter to leave the bank before long. A person with knowledge of Kengeter’s thinking said he doesn’t plan to go. A UBS official declined to comment. Ermotti told staff in a memo this month he’ll take “all actions necessary” to tackle the “paradigm shift” in banking and will continue “remodeling” UBS. He said in July that the market environment has completely changed since the bank announced reorganization plans for the securities unit in November. UBS May Reduce Kengeter Role in Overhaul of Investment Bank Unit [Bloomberg] Related: Was That Wrong? Should Carsten Kengeter Not Have Done That?