UBS Rising?

UBS has been aggressively poaching talent from top boutiques and BBs (see WSJ link inside this post) and has been on some of the biggest deals of 2015.

With many of their European peers in uncertain territory, do you think UBS is poised for future success? How should prospective monkeys evaluate offers from UBS given this seemingly upward trajectory?

Links: http://www.wsj.com/articles/ubs-sets-sights-on-u-s-investment-banking-a…

http://blogs.wsj.com/moneybeat/2015/11/11/busy-few-weeks-for-ubs-ma-arm/

 

They could be, but that's only because so many of their top bankers left post-crisis. They're more climbing out of a low point than reaching new heights. Besides, the European banks are all losing global market share to the American banks, and are even cutting down their IBD size on their home turfs. Relative to their European peers, UBS is probably well off since they've grown more cautious in the past several years, but it still can't compare to its American counterparts.

 

UBS is certainly on its way up. The reason the firm tore down in the first place was to enact a cleaner strategy with less risk and a more direct focus. Now, UBS is hiring bankers who agree with the strategy and winning deals from other banks (including American banks). It will never be able to take the risk an American bank can because of European regulation, but in terms of the European banks it is in excellent shape. Having a cap on risk will limit some products it can offer to certain companies (which can result in some lost business) but it at least protects the firm and its assets. Expect to see UBS continue to win clients away from other banks and grow in a way that is in line with its strategy.

 

Global Capital Markets at MS? Yeah it may be a worse group (by some people's standards) but brand name usually helps more so in recruiting (can speak on behalf of HF but not for PE). Maybe MS has slightly better exit ops but really I'd just go with whichever group you like more, as exit ops from either of those groups won't be too different.

 

I find this incredibly hard to believe...

Buyside firms want to see that you have done financial modeling/valuation... I've never really seen the LevFin or ECM guys at my BB run a model. I could maybe see LevFin guys running some debt pay down models, but even so MS has a minuscule BS and isn't really a big played int he LevFin space.

Not to mention that if you end up getting placed in something like DCM/Converts/Derivatives/etc. then you are really fucked for buyside opportunities.

I do think the brand name of MS has some value, but that value is marginal if you're talking to someone that actually knows finance and knows the difference between coverage/m&a IBD and GCM.

 

Just coming off recruiting, their pitch in the NY office has been largely this: they are on the up and up while all the other European banks are going through the same restructuring they did 3 years ago. Their earnings in the past few quarters have been really good and excellent IBD deal flow (particularly HC).

Comparing offers, it's good that they're growing rather than downsizing, so higher chance of return offers. In terms of PE exits, doubt it will matter much.

 

monkeyz12345 I'm not sure how much weight you put into rankings but here's the 2015 results by Dealogic: www.businessinsider.com/goldman-sachs-JPMorgan-lead-fee-rankings-2016-01.

UBS finished #9 in total IB revenue ($1.9 billion) and #8 in ECM revenue ($3.8 billion) and was not in the top 10 for DCM, M&A, or Syndicated Loan revenue.

They've also just lost a Senior IB Alexander Gehrt to a chemical company, Clariant to lead their internal M&A group (www.wsj.com/articles/clariant-hires-former-UBS-banker-to-manage-mergers-and-acquisitions-1451904410).

Not sure what to make of it but as someone on the outside (O&G industry) UBS seems to have been quiet and has had a lot more openings for positions than other banks for their A&D group as an example.

Any thoughts?

 

UBS is doing fine for itself and it's one of the few BBs that are actually paying their employees in their IBD division very well (in fact, surprisingly well). Keep in mind these days, the senior management of all major banks are not focusing on league tables as much as they did pre-2008 - the focus has shifted towards whether it's profitable to shareholders (aka. RoE), and UBS has done a fantastic job turning around its operations into arguably the most profitable IB among the BBs (on a return on equity basis).

With that said, on a dealflow basis I would say that UBS still has a long way to go before it could adequately say that it's at the same level with the rest of its BB peers. I'll summarize it in a couple points:

1.) UBS cut down on its US IB operations way too much, which had permanently damaged its US IB franchise. UBS is no longer a as strong of a bulge-bracket-level player in the US across products (you can refer to the dealogic league tables if you'd like, that breaks it down on a continental basis), and as much as Ros Stephenson (its IB head) is trying to build back up its US operations, it still has yet to truly bear fruit. This is critical because the bulk of global IB revenue (in general) is generated from the US and the US is the region where UBS had lost most significant presence. Even the equities franchise which UBS distinguishes as its forte has now become a 2nd tier player within the US. Which comes to the next point:

2.) Currently UBS' main strength is in equities and ONLY equities (mainly focused on Europe and Asia, NOT the US). Due to its stringent focus on "capital-lite" activities, it almost completely disintegrated its fixed-income divisions (read: DCM/LevFin), which is great in terms of Basel ratios and Return on Equity figures but took a big hit to its M&A franchise, because UBS no longer has the willingness & capability to provide debt financing for acquisitions. You may have read in the news that UBS hired several MDs in its US M&A/CorpFin operations in the last couple years - yet UBS still severely lags behind other BBs in US M&A deal flow. UBS is trying to reposition itself as a sort of "super-boutique" where it will win mandates more for its advice more so than its balance sheet, but tough luck trying to compete with GS/MS/Laz and the rest of the EBs on that basis. You can see this reflected in the dealogic league tables - UBS does not even make the top 10 in DCM/Loans. However, UBS does great in equities in Europe and Asia (Top 1-3) but NOT the US (read above: US franchise got permanently damaged).

3.) One bright light for UBS is that it is without doubt, one of the most dominant banks in the Asia-Pacific Region. UBS had always been quite prevalent in Asia, and given its strong equities platform and Asia's main focus on ECM, it's not surprising that UBS is considered one of the tops here. You know how in the US, the top 3 could be described as GS/MS/JPM and in Europe, GS/JPM/DB? Well in Asia it's generally considered GS/MS/UBS (Gasp!). If you speak Mandarin and have plans to head to Asia down the line, UBS would be a great place.

TL;DR: UBS in the US is weak (relatively speaking) and will likely stay that way for a while, UBS is really only "strong" in equities in Europe and Asia, UBS is very strong in Asia in general, however investors love UBS regardless because it has the best RoE figures among the major banks (which is what ultimately investors care about, not league tables).

 

Natus quaerat debitis suscipit recusandae aut inventore facilis. Optio dolorum expedita similique sed temporibus ratione. Placeat dolores nostrum dolorem asperiores. Magnam dolorem repellat qui recusandae aut iusto molestiae.

Ut vel pariatur id ab at aperiam at. Delectus id quia rem ut et dolores perspiciatis. Cupiditate quam distinctio illo voluptatem. Saepe et enim ad voluptates laboriosam et molestiae. Et distinctio tempora harum deserunt voluptatem aperiam quasi. Rem similique quia nemo ipsa.

At eveniet eius aut qui excepturi. Modi voluptatum necessitatibus omnis omnis aut. Sit distinctio voluptas qui quod nihil molestiae voluptas. Nesciunt odit nisi quos saepe inventore eveniet qui. Occaecati eveniet accusamus consectetur blanditiis culpa at ullam. Reiciendis cum assumenda harum dolorem harum.

Veniam necessitatibus cupiditate sed sequi aspernatur ipsum. Pariatur nihil tempora ad voluptatem eum dolores.

Career Advancement Opportunities

April 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

April 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

April 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

April 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (145) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Secyh62's picture
Secyh62
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
CompBanker's picture
CompBanker
98.9
8
kanon's picture
kanon
98.9
9
bolo up's picture
bolo up
98.8
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”