The exit of Piero Novelli from UBS leaves its investment bank without its weightiest sponsor of deals for the super-rich. The trading business was and remains elementary within the big bank.
When the 55-year-old Italian dealmaker leaves at the end of next month, he leaves an investment bank that boomed against the backdrop of the pandemic: the unit pre-tax more than tripled last year, thanks to buzzing trading.
It managed to reduce its cost-income ratio to below 71 percent – unheard of efficiency – and hit a return on equity of nearly 20 percent. The UBS unit also loaded up on risk, adding another $13.2 billion in risk-weighted assets, but dramatically improved the return on them from 8.2 percent to ten percent.
Investment Bank in Fine Shape
UBS’ investment bank is in fine fettle because of global markets, the purview of co-head Rob Karofsky. The trading arm – which encompasses equities, debt, foreign exchange, and interest rate products – has posted nearly three times the revenue of the advisory arm overseen by Novelli every year since the duo took over in 2018.
The relation underscores that the balance of power lies with Karofsky, who joined UBS as head of equities globally in 2014 from Alliance Bernstein, where he held the same role. The 53-year-old American picked up the nickname «Killer Karofsky» at Morgan Stanley, where he worked until 2005 before heading for Deutsche Bank.
Covid-19 Gave Timely Lift
The market turmoil sparked by Covid-19 gave UBS’ investment bank a timely lift last year: in 2019, the unit foundered in the wake of Andrea Orcel’s absence – reportedly in large part because the notoriously intense Italian banker «had his hands around 10,000 throats», as one UBS banker put it to the «Financial Times».
Novelli was also the bridgehead of an effort begun in 2019 to build a bridge between other super-wealthy private banking clients and the funding needs of private firms, as finews.com reported. «Private capital markets» was rolled out last year with global as well as regional teams under Ros L’Esperance and Javier Oficialdegui, UBS’ global banking co-heads.
Parallel Swiss Efforts
Alan Felder runs a U.S.-based team, Isabelle Toledano-Koutsouris is responsible for Europe, while Nicolo Magni manages Asia-Pacific. The unit doesn’t disclose any metrics, or even examples of deals as Credit Suisse does for an international sales and trading push under Yves-Alain Sommerhalder.
A UBS spokesman said only the bank was pleased with the private capital market progress. Credit Suisse also bulked out its efforts, under banker Christian Meissner and long-time executive Babak Dastmaltschi, as finews.com reported last month.
