The share price of UBS is sagging, putting pressure on the company to do something about its business. The investment bank may be first in line for an overhaul.
Piero Novelli and Rob Karofsky have been put in charge of the UBS investment bank less than a year ago. Having barely taken over the reigns from Andrea Orcel, they already were faced with a fourth-quarter loss.
It would surprise then if the bank were to apply some changes at the unit and Chief Executive Sergio Ermotti used the presentation of the quarterly figures last month to announce a review of the business.
Deeper Cuts Than Expected?
The resulting changes may involve some deep cuts, according to a report by «Bloomberg». Hundreds of jobs may be eliminated at the investment bank, according to sources cited by the news agency.
Also, Novelli, in charge of IPOs and the advisory services for mergers and acquisitions, wants to reshuffle the management team.
Evolution, Not Revolution
A major reorganization may run counter to what the CEO had in mind when he announced the review. In an answer to an analyst’s question, the CEO said UBS wasn’t thinking about a revolution, but more along the lines of a continued development of the business, employing resources where growth opportunities arose.
Before UBS announced the impending review, the investment banking management had already worked on improving the cooperation with wealth management. A new unit, Private Capital Markets, is thought to provide investment opportunities to rich clients outside the traditional path of stock exchanges.
In the U.S., the Swiss bank has merged some investment banking and wealth management units and it has one office left responsible for trading for both divisions – run by the investment bank.
Job Cuts Seem Likely
September will likely be the time when the Swiss-based company will announce additional changes, though Ermotti plans to keep some of the changes from the public’s gaze.
Some jobs may still have to go – the investment bank has increased its headcount by 12 percent to 5,333 full-time-equivalents from mid-2018. Half of the increase is due to new hires, but as the economies on global scale face choppy times, it may now be the moment to cut back at the investment bank.
