UBS Investment Bank Status Report
Hello,
I am wondering about UBS's investment bank and how it is performing these days. I believe they have fell off considerably and their asset/wealth management has carried the company for the past few years. Has anyone here worked at UBS recently as an analyst or summer analyst? What is it like/what do you work on? What is the culture like? Does anything happen there anymore? Are people leaving now and do analysts have good exit ops? Sorry for the barrage of questions but if you can answer even one of them, I would greatly appreciate your time.
Improved a lot this year, and groups such as Lev Fin are generating more revenue then pre-crisis. The bank is still a good place to be, despite what WSO thinks.
It appears that Andrea Orcel is committed to reinventing UBS as an old model Investment Bank..not sure on the validity of the concept as it would be in a weird middle ground between EBs and BBs but shows they are at least committed to the franchise.
Interesting article on Bloomberg: http://www.bloomberg.com/news/2014-11-18/orcel-facing-hurricanes-remode…
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was a summer analyst and will be returning next year. The summer was great and I got to help close two deals from start to finish and probably worked on 15 different pitches / deals. Culture is group dependent, very fun people that like to go out and get their work done. Group softball games and intern outings the whole summer were awesome. People are definitely not leaving and the analysts depending on group still have great exit ops. Overall the senior leadership in the investment bank are very enthusiastic about the future and talk a lot about being a nimble advisory firm. I had a great experience and will be going to start my career there.
Thanks for your comment. Can u talk more about the group that you will be working? Thanks
I think UBS is a really good place to be. Reinventing their IB business while stabilizing the balance sheet as a whole through their wealth management platform. Orcel will do a good job and the firm will be a great place to be for awhile.
UBS and its status as a Bulge-Bracket (Originally Posted: 09/24/2011)
Ok, now that it has become obvious that UBS's Investment Banking division is being shrunk by the bank (and shrunk by quite a lot), I wonder if UBS will still be called a BB in the near future?
What do you guys think?
UBS needs to adopt a philosophical change in strategy. For the past 10 years, UBS has always pursued scale (whether it be in wealth management or trying to compete for every deal in every sector). Breadth and size is great but it comes at a cost... This worked when UBS' Swiss aura and mystique wasn't tarnished and the market continued to climb. Once the veneer came off, they simply didn't have a competitive advantage in anything and it was obvious. I think it would be a lot smarter for UBS to unwind and pursue excellence in a few specific niche markets so that it remains agile and flexible.
UBS still has a world-class franchise in wealth management and some dominant banking platforms (i.e. Asian coverage / IPOs and certain US sectors). But it is obvious that it needs to shed non-performing areas such as its decimated Houston energy practice... In terms of traditional investment banking, UBS will continue to be a bulge bracket bank since traditional M&A doesn't really require capital. You will probably see a lot less of UBS from a S&T standpoint.
I like UBS but the franchise has always lacked leadership. Ever since its Paine Webber acquisition, UBS has never truly integrated (both international integration as well as wealth management / investment banking integration). I hope UBS can find a true leader amidst this mess. If I were a betting man, I don't foresee it falling out of the bulge bracket any time soon. Nonetheless, UBS should try to find satisfaction / complacency in staying at the #8/9 spot for at least a few years.
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Hello, first comment here! Have been reading this forum for quite a while. :)
I believe the biggest headache of UBS right now is the direct (or indirect) pressure that has been put from Governments and Politics regarding deposits of i.e. tax evaders in Switzerland. On top of that, you have the 2bn losses of one trader. Too much pressure on this bank, and ofcourse the ibanking unit has adversely been affected. As for the BB status, I primarily consider it as a BB Private Bank and secondarily as a BB Investment Bank.
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bump
UBS is shot. Hoping Wells Fargo will overtake them as a BB in the near future. Would buff my resume and credibility passively!
UBS Investment Bank? (Originally Posted: 04/23/2008)
Does anyone know what the story is with UBS Investment bank? This recent release has me a little concerned:
http://www.reuters.com/article/marketsNews/idINL2354587620080423?rpc=44
If anyone could offer some insight on what the implications of this may mean for UBS Investment Bank, I'd appreciate it.
Nobody including senior management has any clue. The annual meeting should be very interesting. Luqman Arnold is being backed supposedly by HSBC, so nobody knows what that means exactly either.
I accepted a Business Continuity job in the COO to start this June - should I be worried?
To be honest everyone from an MD to intern should be worried. If this article is factually correct, UBS IB is pretty screwed no matter what their supposed time frame is as it will be near impossible to retain any talent.
FYI read the financial times article from Monday..I don't have a link but its called Corroded to the Core.
Check out the "Shareholder Report on Subprime Losses" - absolutely the most disclosure you will find anywhere on how all aspects of the business have been negatively impacted, and a good primer on how a bank actually operates for college students who want to get in to the business.
Do you have a link? I tried a filetype:pdf search on google with no luck
I think you are right that it will be tough to retain talent in the meantime. But it isnt like the other banks are in full hiring mode, so many people may not be able to leave for awhile.
In the long run, I'm not so sure that a spinoff of the investment bank would really be that terrible (a sale would be a different story of course) if they had good leadership at the new bank... Moelis left primarily because of the hoops he had to jump through to land deals at a huge firm like that, which would be less of an issue in a standalone bank.
I think it is the uncertainty that will really hurt retention.
I agree its the uncertainity that causes the most harm. If the bank is sold that is a different story altogether (and plausible depending on HSBC's role). However, the phrasing in the article seem to point to an unwinding and dismantling over a sale.
This will take you straight to the pdf, its actually worth skimming through all 50 pages:
http://www.ubs.com/1/ShowMedia/investors/agm?contentId=140333&name=0804…
Is UBS IBD Finished? (Originally Posted: 02/07/2009)
All the bank stocks were up today, and UBS was down. Then after hours UBS spikes 13% ahead of earnings that are coming at midnight monday (early morning CET).
Does that mean someone out there was buying UBS after the close because they know the bank is selling/ditching IBD? Maybe brokerage, or changing something about the PWM situation in the Americas?
I've read the articles that talk about the rumors so no need to point out what the articles in the press lately have said... but does anyone have any idea/speculation as to what the future of UBS IBD is?
I'm not talking about S&T, or some desk that has already been planned to be shut down, i'm talking about corp. fin. IBD.
http://finance.yahoo.com/q?s=UBSN.vx
it is still down in zurich trading, which closed earlier than US. look at the avg volume difference. i think zurich is the deciding factor on price, much bigger volumes there.
anyone else have speculations? i'm interested in this as well.
I worked there for almost 3 years and everyone I know who is still there is worried but saying UBS IBD is over is a bit apocalyptic don't you think?
It is probably going to have less emphasis placed on it from now on (if that is even possible) but it is a solid revenue generator. Why would they chuck it?
Wouldn't the whole situation we are currently in have been called "a bit apocalyptic" in 2006?
I'd imagine that their fixed income division (ex FX&C) would be pretty much cut. But M&A doesn't put any of the bank's capital at risk, so I'd be very surprised if they were to cut it especially after they spent so much money in 2003-onwards building it up. Their underwriting services might be scaled back, but considering that they are(were) #1 in equities placements DCM probably would be worse hit than ECM.
All in all, UBS is still a top5 M&A, and top 10 ECM/DCM - by imputed fees.
But I'm pretty certain that they'll massacare their prop desks - especially FI.
Just my 2c.
I would imagine they aren't going to announce anything huge this week, i.e. that they are dumping IBD, but IMO their actions speak louder than words. What they have done with the bonuses is effectively saying that their IB is an unwanted child. "Please please please take him/her off our hands" they call out to HSBC...
yeah a couple of my friends and one of my cousins were laid off from US IBD not to long ago.
so do you all think most of the axing will come from the S&T side? or for those of us with full time offers on the IBD side, should we be looking for other employment before our full time stints start this summer?
it could be worse, your offer could be from MER
Despite what a few of you have said, I believe the earnings announcement will be very telling with regards to the future of the IBD. I don't mean to say that worse than expected earnings will directly result in dropping the IBD. Given all the publicity this issue has received recently, I just can't imagine it won't be directly addressed.
They will (atleast internally) announce a "strategic decision" about IBD
All my friends there are terrified
http://www.bloomberg.com/apps/news?pid=20601085&sid=aEX0jiXkImdY&refer=…
no strategic change to IBD...
hopefully the top mgmt will be able to clarify more on the future of ibd tomorrow. they can't keep saying there are no changes at the moment but situations "could change" in the future. gives employees a very unstable feeling for working there
From UBS letter to shareholders published with Q4 results:
"The Investment Bank will remain a core business of UBS. It will continue to focus on reducing risk and on turning around its profitability.This will involve it concentrating only on corporate and institutional client-related business in Equities and in Fixed Income in its key markets worldwide. It will also continue to grow its leading corporate finance and advisory businesses."
This says it will grow the IBD... so... I think you're safe wingman.
Hopefully the speculation will be over now and people will just let them get on with it.
Bonuses 95% down in the investment bank though, I'm sure people will leave.
so with the numbers finally out, what are your opinions now? they said after one more round of job cuts this quarter, the staffing levels will be satisfactory so no more cuts in the near future. is ubs a pretty safe place to start out as a 1st year or intern this summer?
i just don't understand why you would want to go to UBS now. All the MDs who are good enough to leave will.
Just my 2c.
What UBS is doing seems so counterintuitive.
You plan to keep investment banking, yet you slash your bonus pool so much that any MD worth a damn will get the hell out as soon as an opportunity presents itself.
stub bonus for associates ranged from 5 to 10 k
top directors (VP's) got between 50 and 60k
Are you serious? Any information on analyst numbers?
so what's the general feeling at ubs right now regarding those bonus numbers? mass defection?
and how about the MDs? are they really getting 0 cash this year?
Dude, analyst numbers don't come out til June/July.
Yesterday the individual bonus figures came out.
Any info?
Just my 2c.
lorican, i posted what i know 2 comments above... can you not read? or did you just ask the question before you read the previous comments?
Just my 2c.
IBnutz is not bullshitting- i've heard similar numbers. and they actually came out on the 10th
look, those numbers are right... if you dont want to believe them or you think they are wrong then that's your choice. but thats the information you're looking for.
those are actual numbers... or they are actual as you are going to get because no one is going to come on here and name their bonus down to the dollar.
thats pretty screwed. expect exodus.
exodus to where?
to smaller shops...senior people can't leave UBS fast enough
let me know who is hiring in mass
march 2nd i'll let you know if its a ghost town around here
I didnt say hiring in mass. obviously nobody is. But that doesn't mean that the resumes aren't pouring in at every shop in NYC. guys who made 700k-1mil a year and are now being told that their bonuses will be vested over 3-4yr periods and only paid if the firm is profitable are outta there. no senior guy is content with receiving just base when they bring in millions in biz a year. i am assuming that you work there so i will take your word over mine, but from what i have seen..if a number of guys haven't left yet, they will be looking to do so soon.
March 2nd will be the moment of truth
yup
March 2nd again? I confirm IBuntz nums btw. The sad thing is in some groups nothing has changed, i.e people are still working their asses off as if nothing has happened. I mean I know they are just glad to have jobs, but man what a bunch of BankerLovers.
What is March 2nd?
Afaik, UBS pay their bonuses out on the 1st March, and so the 2nd the exodus is expected.
Just my 2c.
mm only 2wks away, hope things turn out ok for you Ibnutz
things will be ok, i'm not going anywhere... unless i get laid off
it's 3/2. anything?
ohhh yeah, please tell!
ohhh yeah, please tell!
DITTO.... I need to know.
i haven't seen a bunch of empty desks and its almost 9 pm.... so i guess this mass exodus that folks have been predicting aren't accurate. I guess that people will slowly turn in their notices over the next few weeks.
exodus to where...
GS, MS and boutiques can hire only so many.
thats what i've been saying but there are those on this board who seem to think there are plenty of places to go (they clearly have no clue).
Its dinner time on 3/3 and I still have yet to hear anyone throw their blackberry accross my floor and say "fuck you guys, i'm outta here"
Also, according to Bloomberg, UBS has moved to No. 4 in the league tables regarding overall fees. So it isn't like they are going to be making a whole hell of a lot more elsewhere.
1) JPM 2) Citi?! 3) GS 4) UBS 5) MS
It will be interesting to see what kind of committment the new CEO and Chairman have toward IBD. I think UBS is a pretty decent place to be right now. No, you're not going to make as much money as people made 2 years ago. But you are going to get onto Wall Street, learn the basics, hopefully have some marketable experiences and be positioned for the economic recovery whenever that may be.
any idea when the rest of the 2000 cuts will be taking place?
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1btkGxqYLbA&refer=…
From what I've heard from my group head (indirectly) and from buddies in other groups, most of the coverage groups on the IBD side are done with layoffs for a while (maybe for good). This is always subject to change and none of it is "formal" rumor, if that makes sense.
Just my 2c.
http://analytics.dealogic.com/wsj/CHINACO-RioTintoAsset-608483.htm
i think this is one of the latest ones
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3iCGiEAAxvA
2 so far, lets see how many in the next 6 months.
@Ranger:
that dealogic link is pretty out of date. This article has Citi as #1 in M&A YTD and MS as #2 in M&A YTD:
http://blogs.wsj.com/deals/2009/03/06/citigroups-troubles-dont-distract…
[quote=IBchimp]@Ranger:
that dealogic link is pretty out of date. This article has Citi as #1 in M&A YTD and MS as #2 in M&A YTD:
http://blogs.wsj.com/deals/2009/03/06/citigroups-troubles-dont-distract…] I saw up-to-date tables last night.
2009 YTD - Dealogic -
TR-
I don't know specifically about layoffs in Europe, I do know my group got pretty much decimated at the Associate level in London.
@IBchimp - you're right, but what i'm trying to get at is that pretty much any bank not associated with the pfizer deal did not place into top 7 in m&a this year. ie: DB, UBS, CS
@IBnutz - have you heard anything about the incoming 1st year analysts? are all the offers still ok? is HR going to offer the 1 year defer employment again like last year? thank you
haven't heard anything specifically about incoming analysts but i did talk to HR about some incoming associates from my b-school and they told me their jobs are all safe, and the incoming associate class is actually going to add 1 or 2 people from where it stands now.
i would imagine analysts are in the same boat. i have heard no rumors of cutting incoming people.
again, i dont know as much about the analysts and the rumors surrounding them but as for associates you have to consider that no first year associates have been let go (as far as i know). thats a good sign for incoming folks that you can show up and your job will be safe atleast for a little while.
It's not finished yet but its on its last legs.
I wouldn't say it's finished but yeah, if you have the chance to move somewhere else GS/MS/CS/JPM then do it.
How about good MM firms. I heard some kids taking Harris williams over it.
This is such a stupid thread. Q1 earnings report says they're fine + definitely still a BB.
They've just hired in a load of new top management, and poached some MDs from other banks
It's still profitable.
I don't think it's going anywhere.
You guys are idiots... this thread is from over a year ago.
jimbojones' state of mind is apparently still 1 yr in the past too
jimbojones and mrbrightside are retarded. UBS is still in the top 10 of global and US league tables in IBD.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abI4VxAsfwgA&pos=5
[quote=dollabillz]jimbojones and mrbrightside are retarded. UBS is still in the top 10 of global and US league tables in IBD.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abI4VxAsfwgA&pos=5[…]
and http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.ukXzTABf9U
some of these posts from the juniors here are just retarded
http://preview.bloomberg.com/apps/news?pid=newsarchive_en10&sid=aY046sS…
No one cares about these types of articles. Less than two years ago, UBS was gonna sell the IBank, now I'ts the greatest thing ever. What a shit company.
huh? it was a speculation article by bloomberg? does bloomberg dictate UBS strategy?
1) no us separation laws of that sort were put into effect 2) no capital requirement changes by swiss gov 3) investment bank unit was turned around
the article clearly lists 3 points as reasons for a sale, none of which occured
This is my point exactly. Articles can be a good source of information, but lots of times, they are pure speculation.
Great article on UBS (bad news for its IB) (Originally Posted: 05/20/2008)
This is a great feature article detailing how UBS ended up in the position it is in. It also gives a great description of the timeline of the credit crisis.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a3sm9FOrsWcg&refer=…
The article brings up the point that many activist investors are calling for a sale of the investment bank.
"Arnold and other major shareholders think UBS should concentrate on what it does best: wealth management. That unit contributed 24.9 billion francs, or 78 percent, of the bank's total operating revenue in 2007. Arnold wants Kurer and Rohner to sell the asset management unit, which offers investment funds to institutional and retail clients, and the bank's Brazilian unit, Banco UBS Pactual SA.
Asked about Arnold's suggestion, Rohner rejected the idea.
We don't see any need to sell assets,'' he says.
The real issue is how we work together collectively under the one-firm model.''...
"``It would be good to sell the investment bank,'' Sagard says.
Hummler agrees. He says UBS's private bank alone could be worth 100 billion-150 billion francs, as much as twice the current market value of the whole company. ``The UBS stock price is too low, and it would be higher with a split solution,'' Hummler says."
What do you guys think? Is it feasible that the investment bank would be spun-off? What would be the implications of that scenario?
barcap is looking at UBS right now
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/20/cnbar…
to clarify they are looking at the Investment Bank (not ALL of UBS...which the Swiss would never agree to sell)...and its a longshot, as I said three weeks ago.
Read the original report issued on the EBK paper. What happened is unforgivable, but what you have at the core of UBS is still an awesome equities, m&a, asset mgmt and wealth mgmt business. They will be less of a trading house for some time, alright and their fixed income always sucked. So what. Once the remaining toxic assets are neutralized (keep in mind that in many of them the underlying real estate assets have not defaulted on any payments at all, but they must mark the financial instruments to market due to accounting rules), people will again talk about the returns posted by the other activities.
That Barclays story is ridiculous. I also want to own Goldman Sachs, but nobody has knocked on my door yet...
The Barclays story is pretty ridiculous. UBS IB still has some very strong assets. Its rather unlikely a sale will happen.
UBS IB - should FT08 analysts be worried? (Originally Posted: 04/04/2008)
After hearing the writedown news, the certainty of deep job-cuts and now the new activist campaign launched by Olivant, I was wondering if some of the senior people on the forum think that FT08 analysts should be worried? In particular, the prospect of a break-up is becoming increasingly possible, if not in the next coming months, perhaps over the next 1-2 years.
I'm not one to buy into rumours, but this is now becoming increasingly worrying for somebody who had accepted an FT08 offer, turning down other offers on the Street and elsewhere.
FT offers will be honored
I'm having flashbacks to the conversations on Bear's FT offers......
ghosht, how do you know for sure? Obviously this is not a Bear Stearns scenario (i.e. the bank is not going under and will not be bought in the short-term), but clearly the message is to scale down the size of the IB and that may involve cutting down the incoming class. A break-up/sale of the IB would be even worse, I imagine, though would not be logistically possible in this kind of market anytime soon.
Any thoughts on the medium-term (1-2 years)?
After reading the WSJ article on UBS on wednesday, it was pretty clear that the new chairman realizes the IB is the prime breadwinner for the firm and he is going to try and strengthen it in any way possible. They talked about job cuts, and the number was around 1,500 in the IB but it was stated that this was from last year to now...not 1,500 more to come. Though its possible there could be some shake-up, I personally believe that "strengthening" doesn't have to do with slicing thousands of jobs, but rather keeping talent within the groups.
Just my $.02
My impression from the press is that wealth management is the jewel and that they'll do anything to protect it, even if that means eventually spinning off the IB.
Read the actual letter here, labeled "Letter to Mr. Marchionne" http://www.olivant.com/press-releases/
He's basically saying that Wealth Management and Investment Banking should be held onto, but perhaps legally separated, and that Asset Management and/or Pactual and the Austrailian Business should be sold.
As far as where cuts may be made within IBD he also states "it will be important not to allow the concentrated failure by a relatively small group of senior management and traders pursuing a single proprietary trading strategy to result in a general retreat from risk, with negative consequences for the investment banking client-focused franchise and retention of talent" . . . i.e. let's not throw the baby out with the bathwater.
I'm starting in July, applied to the M&A team in London. So far UBS HR has proceeded as normal (as one would expect) and has organised a welcome event in a few weeks.
The Olivant letter seems to focus on the key problems with the firm's management. i.e. that certain boards should be separate and not conflicted.
I think the spinning off of the IB division is unlikely given the market turmoil, however I certainly agree that there will be drastic cost cutting measures taking place in the coming quarters.
Olivant holds only 0.7% and therefore is hardly influential, the only concern is whether there position acts a rallying point for the disillusioned shareholders before the upcoming AGM.
I very much doubt one of them will be to rescind graduate offers - Due to the low cost labour that grads offer, bad publicity on campus, and the fact that grads are the future of the firms growth.
There is a substantial difference between Bear's position a few weeks ago and where UBS is at now.
a global head said to his group that jobs are safe at the analyst level and new hires wont be affect incoming hires.
Do you think Citi, Merril, and UBS will cut middle office FT and Internships?
what are the chances that summer offers will be revoked?
1%
IB is not the prime breadwinner of UBS.
And you should be worried even if your offer is honored. The VPs will most definitely be fired. Maybe some Ds too. MDs with good client networking will stay.
This means you'll have no one in between you and very senior guys; meaning you'll have heaps of work to do, no one to check it and so forth. And even after all that, you'll get a pitiful bonus.
Charley . . . in your opinion will new associates get axe as well, leaving only MDs and analysts? Or can one expect most analysts + 1st & 2nd year associates to make a cut?
Im having a flashback to GenghisKhan saying that Bear Stearns people who got their offers revoked should look at it as a head start on finding jobs before other offers get revoked at the other banks.
Yes, you should be worried. Not because it's UBS, but because it is banking and the cuts are going deep and lots of people are losing their jobs.
If I were entering rather than exiting banking right now, I would be worried over continued future cuts as well as general lack of dealflow and all the economic problems.
Whether or not you should shop your offer is up to you. As of right now, I don't think this is at all similar to the Bear situation where you could tell even at the beginning that hedging your offer would be necessary.
Warhawk: That's an interesting point from Genghis, and one I somewhat agree with. Things are bad, and seem to be getting worse.
If you are really paranoid, sure, go shop around... but I don't know that I'd recommend it to all incoming FTs at this point.
The first, and most important, thing here is not to overreact.
The level of anxiety here on this board mirrors that which is probably felt on campus among the Wall Street-bound, so I'm not surprised by it. Frankly, if you were on a bulge bracket investment banking floor you'd see an atmosphere that is pretty gloomy in many respects too. Between layoffs, which have been active for the past week and should continue through the balance of this month, and general market upheaval - well, let's just say that a certain amount of paralysis sets in as people worry about jobs and careers and that tends to make these downturns feel even worse than they are.
But there's very little of it you can control. If you're on campus or taking a last hurrah trip to backpack around Europe, there's nothing you can do to affect the decisions being made about you in midtown or downtown Manhattan. The same goes for the young analysts and associates looking around their cubes in trepidation.
It's just not a good approach to spend the next five months staring at your cell phone hoping you don't get a (212) call out of the blue if you're a student, any more than you should be hiding in your cube hoping to not get a call from the 25th floor conference room or a visit from a pair of security guards to take you to said conference room. You'll drive yourself nuts, paralyze your ability to function, and pre-destine yourself to the outcome you don't want if you do.
I tell my junior bankers that this is a time to show what they're made of. Everyone reacts to adversity differently. Don't let fear and despair render you unable to function. Don't allow it to make you someone who you are not.
Sorry - I'll stop preaching. But given that I've been a voice of pessimism for the past few months, I wanted to put my words in perspective. Eye the situation with a realistic eye, but don't give up just because you think you face potentially long odds.
But back to UBS. If I were an incoming associate, analyst or summer - would I be worried? Yes, definitively. Do I think they'll start revoking offers? No, not necessarily. As ex-banker has pointed out, there are campus relations, student relations, general reputation and even self-image factors that mitigate the willingness of firms to take such an extreme measure.
But do you think they'd prefer to pare back the classes? Absolutely. And that's the risk. If things get worse, all bets are off. So no, I don't think they'll do it (yet), but I know for a fact that for UBS as well most firms on the Street, the option is not off the table.
As Dosk points out, however, the risk really isn't in the revocation of the offer, it's really general layoff risk at this point.
One thing I do want to point out that I think may have eluded some people on this board: what is the purpose of the summer program? I've heard people say "we're cheap", "they would love to have us in other groups", "we're an investment", etc. All of which I think tend to reflect a tenuous grasp of reality.
The summer programs exist for one reason alone. To minimize interview error. That's it. We get the summer to test drive the candidate (and sell him/her a bit), and that candidate gets the summer to figure out whether he/she likes us and investment banking. It's not to improve yields - in fact, in many ways it increases your risk profile for losing a summer because the summer experience enhances their ability to trade up during FT recruiting.
It's not to get additional hands - summers are far more trouble than they're worth. In most instances they increase the amount of work you have to do rather than reduce it, because they're new and as a result slow and prone to error.
So say you typically hire 100 summers, with the idea that you'll give offers to 60, hit on half and get a 30-person head start on recruiting. Now the market sucks, so you're more likely to get an 80% yield than 50%. And probably your target isn't 30 accepts anymore, it's a lot less because now you're trying to shed bodies rather than adding them.
You don't need anywhere near 100 summers. Even accounting for additional option value, you may not even know what to do with 100 summers, given all of the professionals you've killed off and the additional capacity that is unused in your analyst and associate bullpens. Hell, you might prefer to go with 50, since it would just be a lot more manageable.
Do you keep all 100?
Actually, yes. As long as you can. But not forever.
Does that answer the question?
GenghisKhan,
What do you foresee for the summer '09?
And I recall earlier that you said more SAs at other banks may be let go?
Is that an option that is currently being discussed heavily amongst bank? The summer is quickly approaching that is why it seems like such an extreme measure at this point
Also, I do not work for UBS, but do you think that it will be split up? I tend to think so. Curious as to your thoughts.
The bank that really concerns me is Citi. I could see them pulling SA and FT offers
Following GenghisKhan's post, from what I've been hearing, what you say sounds about right - i.e. FT offers will probably be honored, but the layoff risk remains in general.
Having noted that, is it worth thinking ahead slightly and considering other options? What would be the real point of having an FT offer honored at say UBS or Citi if there is a reasonable likelihood that 1 year down the track you get laid off because pressure on the firm continues to build? The reason I single out these 2 firms in particular is because both have been hit particularly hard with writedowns but, more importantly, investment banking is not necessarily a core business, and I'm not convinced of the commitment to investment banking in a downturn/long-term(this probably goes much more for UBS, given Vikram Pandit has an investment banking background as does a solid chunk of the Citi board - i.e. Rob Rubin).
So, Genghis and others, I'm curious as to what you think would happen in the event that 1 year down the track UBS decides to legally separate their IB with a view to a sale? Would that just exacerbate the bloodletting?
Also, even though I've heard the 'campus relations' and 'image' reason used a lot to explain why banks would be reluctant to revoke offers, how much would this hold sway if a bank decides that it is not all that committed to investment banking anyway beyond the 2-5 year horizon?
Granted, all of this is speculation at this point. But the events of the past couple of weeks lead me to think that this stuff is worth considering.
The other problem with a lot of this thinking is that even if you decide that it is worth acting to move elsewhere to head-off the possibility of getting laid off in a year, I imagine that would be very difficult to do right now?
It really is premature to think too far down the road - market conditions during your full time stint are a virtual lifetime away. As you can see from the change in market sentiment from July of last year versus September, or January of this year versus now, a lot can change in a very short period.
Let me give you a more optimistic view of history, for a moment. There is much talk of how banking is becoming more of a commodity business, or how firms are looking to exit investment banking due to the volatility. Don't take it too much to heart.
When I used to do more violent things for a living, I used to say that you should look for "ground truth". Forget what all the commentators say and look for evidence that definitively describes behavior. Humans are very good at modifying behavior to suit ground truth.
For all the talk of disintermediation or commoditization of our business, what has happened to employment, and more importantly compensation? It has escalated completely out of proportion to the economy at large. Put on your economist hat. Is that evidence that investment banking has become a fundamentally more challenging business? Exactly the opposite, right?
So now, the talk is about how banks can't stand the volatility, and may exit or separate their IB business.
OK, that's fine. Does this mean companies will require less investment banking work? Less capital raising? Less M&A? Perhaps moderately in the medium term, since the leveraged finance business and associated private equity is likely to become more difficult. But overall, someone will pick up the slack left by Bank of America and others if they exit.
The question is fundamentally one of whether a money center commercial bank has the risk appetite to hold a large scale investment banking practice, not whether investment banking is a lucrative business. The long term question is more relevant, in my opinion, for private equity and hedge funds, which have sprouted like wildfire in the light of easy debt markets.
This down market, like all others, will pass. It may take longer or shorter than we expect, but there seems very little reason (in my mind) to overreact negatively than there was to get carried away by the exuberance in more favorable markets.
holy s**t gengis, that was an extremly long post, but very informative.
I don't really know about this particular topic, but I would assume that even if you are afraid of losing your job, there isn't a whole lot you can do right now in terms of lateral transfers, because everybody is having a tough time right now.
Is this accurate or not?
GenghisKhan, I must say that I love your writing style. It has a hint of darkness that lingers behind as the truth is driven in with a firm hand. Perhaps the best on the board IMHO. Was it developed through your banking career (all those pitchbooks have got to add up to something), or is it more innate?
As far as the content goes, it put things into perspective for me. Could you elaborate a bit more about looking for the "ground truth"? Not in a banking context, but just in any situation.
First of all I would like to thank GenghisKhan for the highly valuable insight on UBS/investment banking in general.
I have noticed that UBS scaled back 08 full-time recruiting on campus, not sure if it's only my school or not. Would this give less risk to the incoming FT?
does anyone have any insights specific to the Australian business?
Depends on what part of UBS you are in. Olivant is pushing for the sale of the Australasian Asset Management business.
What about the Investment bank? I mean, UBS is #1 in Aust, surely it isn't as dire here as it is in the US/Europe etc??
I understand the market analysis of ppl like Genghis etc. As a potential incoming analyst, I am happy to take on the risk that you do well in good times, and you run the eternal risk of being laid off in bad times. That risk lies at the base of the industry, and is one we are now all aware of.
But what I'm more interested in is the particular risk of working at UBS or Citi, who may not hold on to their investment banks. I just saw this new article on Bloomberg claiming that UBS will sell their investment bank in 2-3 years. http://www.bloomberg.com/apps/news?pid=20601102&sid=aY046sSHRsJw&refer=…
In this context, what are the risks for an incoming FT 08 analyst at UBS, for example? Beyond merely the broader risk in the market that layoffs intensify as things become worse before they become better?
Yes..Can someone talk about the risk of working at the more troublesome banks?
Vikram Pandit won't exit the investment banking business at Citi - that's where his background is.
Some of my thoughts/observations as a BB 1st year analyst in a group that was heavily affected by layoffs:
FT 2008 analysts are more safe if they have direct offers into their groups as opposed to going through a placement process when they arrive for training. The reason for this? FT offers were made in Oct/Nov when very few banks, if any, thought that the credit crunch would last as long as it has. I would be shocked if the analyst headcount in my division can accommodate the large class that is about to start in July. Not every FT08 analyst that has to interview for his/her group placement will make it through training. The lucky ones will get moved to other areas of the firm. This happened in fall 2001 and it will happen again.
The few analysts that haven't made it through the massive layoffs at my bank were all able to find better jobs within two months. The more senior people have had a much harder time. Laying off analysts is still a last resort, as the cost savings is minimal. We will definitely see a lower 2nd year to 3rd year analyst/3rd year analyst to associate promotion rate, but that shouldn't be your immediate concern.
As for Bear-style transactions that could wipe out entire groups/divisions/etc at a bank...that is, as we have seen, clearly much harder to predict. As a UBS analyst you are probably in a better position than a Bear analyst - JPMorgan wanted Bear's prime brokerage division, not its IB. UBS' IB is strong enough that I doubt it would be the case. Individual trading desks, etc I can't comment on - but that is my overall impression.
Overall, a lot more mid-level (assoc/VP/director) people will lose their jobs. The weaker analysts probably won't make it either, but at a lower rate. Keep your interview skills sharp, your resume up to date, and enjoy the short time you have left in college - there isn't much more you can do now anyway.
That's the worst argument in the history of the world.
Sh!t is going to hit the fan this summer
I thought Macquarie was #1 down under!
Macquarie and UBS are both #1s depending on your league tables.
UBS IB (Originally Posted: 03/04/2007)
What UBS IB divisions in NY would be the least desireable?
I hear Healthcare is a sweatshop
Don't go into FIG. From talking to analysts there, everyone wants to be in M&A because they send kids to Carlyle every year.
sweatshop and exit opps. are not even close to M&A/Sponsors. I have heard that GIG is sweatshop in NYC as well.
Healthcare may be a sweatshop but it is also UBS' most well-regarded group imo.
Ben L, fell off.
while HC may be a sweatshop, from what i hear, you can get a direct promote from 2nd year analyst to associate. so it may be a good option if you are looking to be a career banker in a leading group of an industry that will continue to grow into the foreseeable future.
that being said. yes, i do hear horror stories about analysts and summer interns that have worked there.
if you want exits, HC should be at the bottom of your list.
Why do you say that HC has bad exit opps?
to clarify, when i suggested they had poor exits, i was speaking relatively, comparing the exit opps of HC to that of M&A/Sponsors.
UBS Investment Banking (Originally Posted: 09/22/2007)
What are the hours like for an IB analyst within the Municipal Securities Group (public finance)? Are they the same as other groups within IBD?
bump
Isn't the Municipal Securities Group in Capital Markets not IBD?
Just going to throw this out there, if you want to get into IB you should assume you're going to be working 100+ hours per week. This way, if you are working only 80-90 hours, you can be excited for how easy it is. AND if you're working 120 hours per week you can tell yourself that it really isn't much more than you thought.
In all seriousness, if you're caring about the hours, IB probably isn't for you. People in banking generally are willing to do whatever the fuck it takes to get themselves to a higher level in their career.
UBS suffers 3Q investment banking losses (Originally Posted: 11/01/2010)
http://www.guardian.co.uk/business/2010/oct/26/UBS-investment-banking-t…
A slump in customer activity and a weak performance in equities, foreign exchange and fixed income trade drove the investment banking division of UBS, the Swiss bank that employs more than 6,500 people in the City, to a loss in the third quarter of the year.
The investment bank dived to a third-quarter loss of 406m Swiss francs (£260m), considerably lower than the Sfr1.3bn of profits in the second quarter, the result of the overall downturn in volumes in the market and a decline in the value of the bank's own debt.
UBS admitted that it had incurred personnel costs of Sfr5.4bn in the investment bank for the first nine months of the year, up from Sfr4.5bn in the same period last year. In the third quarter, however, costs in the division were down 25% "most due to lower personnel expenses", although revenues fell by 36% on the quarter – showing the bank is still accruing for bonuses at a faster rate than the decline in revenue.
Personnel costs for the entire bank, which also includes retail, Asset Management and private banking, were Sfr4bn, down 14% on the previous quarter. The bank attributed this to "reduced accruals for variable compensation". Costs did not fall as fast as net profit, which fell 29% during the same period.
The losses in the investment bank overshadowed the net profit of Sfr1.6bn reported for the third quarter, down on Sfr2bn in the second quarter but boosted by a tax credit of Sfr825m, taking the pre-tax profit for the quarter to Sfr818m.
Despite its third-quarter loss, the investment bank was profitable for the nine months reported so far this year, making Sfr2bn, compared with a Sfr6.3bn loss during the same period last year.
Analysts saw this as a demonstration of the reversal of fortunes that has taken place at the bank in the past 12 months. Bailed out by the Swiss during the 2008 banking crisis, UBS was able to report that customers were once again depositing their savings. The turnaround came after a period of outflows, sparked by a US investigation into the tax affairs of UBS's clients and the bank's disastrous performance in the financial crisis, when it slumped to a record-breaking Sfr19.9bn loss.
Oswald Grübel, the chief executive of UBS, who was pulled out of retirement to tackle the bank's problems, said: "The third quarter was unusual in that there were very low levels of client activity as well as a strengthening of the Swiss franc against most major currencies. This had an impact across all of our businesses.
"However, we are optimistic that an uptick in the fourth quarter will benefit all of our business divisions. We remain confident about our future and believe that we are on track to achieve our medium-term goals."
The Sfr1bn deposited in the third quarter was the first positive figure in 2½ years. John Cryan, finance director, was cautious, saying: "We won't call this a victory until we see a number of quarters of much higher and sustainable net inflows. It's not necessarily an inflection point. These flows are very lumpy."
Shares in UBS closed down sharply at Sfr16.72, a fall of more than 5%, despite the positive remarks from Grübel that activity would improve in the fourth quarter.
The bank hopes that its strong core tier-one capital ratio – a key measure of financial strength – will help to attract inflows from customers. At 14%, it is one of the highest of any European bank.
THoughts?
um... just that banks are doing it tough. i mean, just the other day cs suffered an earnings drop
When they say UBS is cutting staff in the investment bank.. (Originally Posted: 09/28/2011)
Do they mean actual bankers or do they mean salesmen and traders? For instance in this article (http://www.bloomberg.com/news/2011-09-26/ubs-bankers-face-dwindling-opt…), they specifically use the word "bankers" multiple time in the article, but wouldn't it make more sense to cut the S&T staff? You know- the people actually losing money... (right?)
Correct me if I'm wrong though.
Yes by "bankers" they usually mean anyone employed by the Investment Bank (not IBD).
Ok yeah that's what I figured... this is probably why the public blame investment bankers (and by this I mean IBD specifically) for the crisis.. you'd think bloomberg would know to differentiate this no?
Most cuts will be in FICC
The investment bank has "self-shrunk" for the most part -- that is, most of the best bankers have already taken their teams and left
You guys are fucking retarded. Sales and traders are investment bankers as well. Not advisory obviously.
The Investment Bank contains both S&T and IBD, very confusing for those who don't know that beforehand. UBS is cutting primarily from S&T. Some will be cut from IBD (they just had a round of layoffs two weeks back), but nothing abnormally large, at least relative to most other BBs.
UBS ready to take axe to investment bank (Originally Posted: 10/24/2012)
From today's FT:
UBS is planning further drastic cutbacks in its struggling investment bank as Switzerland’s largest bank by assets accelerates a retreat to its more profitable wealth management business.
The move will prompt the loss of several thousand jobs in the investment bank and in support functions across the group, people close to the situation said. Executives of the bank were locked in a board meeting in New York on Tuesday to thrash out details of the plan.
This restructuring will be a drastic next step in a strategy unveiled almost a year ago by chief executive Sergio Ermotti to give UBS’s often troubled investment bank a support role for the bank’s market-leading wealth management. The bank had moved earlier than rivals by announcing 2,000 job cuts in the investment bank late last year after a $2.3bn unauthorised trading loss. Back then, it targeted to bring down the unit’s staff levels to 16,000 within five years. At the end of June, its investment bank employed 16,432. The unit had brought the Swiss lender to its knees during the financial crisis, forcing UBS to retrench faster and earlier from the area than most of its rivals. Its investment bank had yet another troublesome quarter between April and June after the botched IPO of Facebook dragged it into a loss.
People close to the situation said there were still various options being discussed at the board meeting and that the cuts might not be finalised in time for the third quarter results next week. But they added that the strategic planks for the cutbacks had already been drawn out. In the investment bank, UBS is eying to exit further capital-intensive areas in fixed income trading such as long-end flow rates and global correlation trades.
Under new rules, regulators force banks to hold much more capital against such businesses, making them much less profitable than they used to be. Mr Ermotti is also looking to centralise further areas in information technology and other back-office functions, an endeavour that has been met with internal opposition from some divisional heads. The bank has launched an initiative this year to learn from industrial companies such as sports car maker Porsche to become more efficient in middle- and back-office functions.
UBS’s investment bank is trailing far behind the 26 per cent return on allocated equity that the bank is achieving in core areas such as wealth and Asset Management, despite consuming almost half of the bank’s equity capital, estimates by Morgan Stanley show.
“Investors are keen for UBS to shrink capital from the low returning investment bank to reveal the value of wealth management franchise,” Huw van Steenis, analyst at Morgan Stanley, said.
Wow... Cut from 16,432 to 16,000 within five years? This is huge!
Nice scoop - thanks for sharing.
YoungOne - The article highlights the fact that UBS has to front-load its cuts due to the unauthorised trading loss, thus originally thought only to whittle down their IB division to 16k within a five-year timeframe, they've had to restructure their ops much sooner.
God knows how much more cutting will occur following the most recent board meeting. Makes sense though, given their 26% return on allocated eq, why the heck would they continue to hold a high cost base with a gem of an AM / WM franchise??
If all the banks decide to axe I-banking division then who will do the banking?
Jefferies.
So what does this mean for people waiting to get FT offers?
http://dealbreaker.com/2012/10/layoffs-watch-12-ubs-10/
[quote=clammers1234]http://dealbreaker.com/2012/10/layoffs-watch-12-ubs-10/[/quote]
That is wild. I would think the entire office (those that didn't get laid off) would immediately start focusing on finding another job / I mean you might as well lay off the entire office at once.
Does anyone have an idea as to what all these people will do? I mean I can't imagine all of them will immediately get right back into banking (too many at once) - do you thnk most of these guys will be employed in a week or still looking?
How long until UBS is no longer a BB presence in America? Why are they getting killed so bad on the IBD side of things so much worse than everyone else - are people just no longer giving them deals? Even BAML looks stellar compared to UBS right now christ.
UBS Scaling Back Investment Banking (Originally Posted: 07/16/2013)
This probably won't come as much of a shock to those of you who've been in the business a few years, but UBS has decided to scale its investment banking division way back in favor of PWM and asset management. UBS will still offer investment banking services to existing clients, but the days of chasing deals are over for the bank.
While all this sounds gloomy on the surface, it actually looks like a smart move on the part of UBS. Wealth management has always been their sweet spot, so it makes perfect sense to devote the majority of the firm's resources to those activities most in their wheelhouse. And with the regulatory environment being what it is, it appears UBS is just getting ahead of the curve by scaling back IBD. I wouldn't be surprised to see more banks paring back services like this. The days of being all things to all clients, an UberBank if you will, are behind us. More and more it will become about specialization. That's not to say the big banks won't adjust, just that the more agile boutiques will probably gain some market share.
What do you guys think? Is this a good move for UBS? The company still has a big IBD presence in Asia. I wonder what it means for those guys.
Would you make the switch from IBD to PWM if it meant keeping your job?
I'm surprised. I didn't know there was anything to scale back at this point.
LOL. +1
Seriously, though, you gotta dance with who brung ya. PWM put them on top, so I think it makes pretty good sense to focus on that and get out of all these various lines that have done nothing but bring them grief. Of course, PWM wasn't exactly a walk in the park for them, either.
The article just repeats what was announced in 3Q 2012. UBS is scaling back in FICC, not in IBD. Old news, cited article is amateur journalism at best. What's more, UBS actually increased RWA in its IB division in 1Q 2013, a little bit of a surprise given that they still have a long way to go to get to the goal of $70bn RWA for the IB. Some brokers are actually concerned UBS may not fulfil its promise of scaling down as deep as announced in 3Q because of above average results in 1Q 13. Surprised you didn't do your diligence on this one
^works at UBS
Someone didn't get their coffee this morning
Haha, agree my post looks a little aggro.. Actually more an attack on the article than Eddie :)
This ^ and it makes sense they concentrate on PWM. That's what they are strongest in.
I hope this doesn't make me the stupid guy in the discussion, however, how does this impact their equity research group? I realize that ER is part of the investment bank, but they have been hiring like mad for their research division.
Might as well make money at what you are good at instead of lose money at something you aren't, seems pretty simple.
Funny thing is, I know a lot of people who work for UBS in FICC. They didn't get laid off and got significant pay increases/guarantees early this year.
Per Kassad, I'm also curious how it affects ER there
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