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Things Are Going To Suck For A While: UBS Investment Banking Chief, Basically

Or continue sucking, as it were.
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How are things going at UBS's investment bank? Not great! In a memo yesterday, IBD chief Andrea Orcel announced that the Swiss would be consciously uncoupling with a handful of senior executives, including its co-head of equities and co-head of fixed income, rates and currency, and rather than strike an optimistic tone for the future, Orcel then proceeded to list all the reasons it's going to suck to be UBS for at least the next few quarters.

“We are now in a period of dislocation -- a perfect storm of challenges and changes from regulation, competitors and markets,” Orcel said in the memo...Profit at UBS’s investment bank dropped 67 percent to 253 million francs ($258 million) in the first quarter, the lowest total for the start of a year since 2009. The bank’s stock has decreased 35 percent this year, tracking a slide across European financial shares. UBS extended its slump after the U.K.’s shock vote to leave the European Union last week roiled financial markets around the world.

Naturally, there will be layoffs or as Big O refers to them, a "streamlin[ing]" of "layers."

He also said the investment bank must become more “streamlined and efficient,” with fewer layers, as the operating environment continues to change four years after UBS decided to shrink the division and exit most fixed-income trading.

And if somehow you're spared from the streamlining, grab a barf bucket and keep it at your desk.

“I can’t promise you that it will all be smooth sailing from now on,” Orcel said in the memo.


UBS’s Murphy and Naylor Leave as Orcel Overhauls Senior Team [Bloomberg]


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?

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UBS Is Basically The Bermuda Triangle

It just can’t stop getting slammed by perfect storms.