The UBS investment bankers are experiencing the same sense of uncertainty as their clients.

Shortly before the outbreak of the coronavirus pandemic, UBS was doing some restructuring at its investment bank. Piero Novelli and Rob Karofsky, the co-heads of the unit, reshuffled the various parts of the business, rearranging them under two global divisions and putting a lid on costs at the same time.

The restructuring didn’t slow the business in the first quarter. Global Banking, the division which is advising companies on takeovers, an increase in capital and similar moves, improved its revenues by 44 percent from a year earlier.

Cautious Companies During Pandemic

Many transactions that generated handsome profits in the first three months of 2020 will have been set up before the crisis started – so it stands to reason that the rest of the year will be more strongly impacted by the pandemic. Companies tend to be cautious in making major transactions as it is more complicated to assess the fair value of a firm during a pandemic crisis.

The division led by Ros L’Esperance and Javier Oficialdegui will hence concentrate on financing and on the issuance of stock and bond, as they told a round of journalists. The surge in income in the first quarter was mainly a consequence of a focus on advisory services.

Personal Interactions Is a Key Business Tool

The two managers expect an upswing in activity once the global firms are back on solid ground. It is the time when private equity firms will pounce. They have been rather reluctant in recent years due to the high valuations.

The slowdown in activity also has to do with the fact that mergers, for instance, depend on human interaction, on businesspeople talking to each face to face. L’Esperance noted that it was easier to get a CEO on the phone at the moment, but that it was difficult to conclude deals without prior factory visits, meetings in person and discussions with the management.

Concern About a Second Lockdown

If the current slowdown were to persist for a longer period of time – or if the as Oficialdegui mentioned there were to be a second lockdown in the autumn – more action may become necessary at UBS. But for the moment, the company believes the unit has an appropriate size. And it is still hiring new people, as Oficialdegui told «Financial News».