The latest changes come against a backdrop of regulatory pressure on the investment banking sector that has brought strategic and structural issues to the top of senior executives’ agendas – a tricky backdrop that has just been complicated further by the UK’s vote to leave the EU and ensuing market turmoil.
The changes at UBS will see a trio of bankers leave, including one who Orcel named in his top team when he split the investment bank into two divisions covering investor and corporate client solutions soon upon taking sole charge in November 2012.
In a memo sent to staff on June 29, Orcel, the investment bank’s president, hailed the investment bank’s progress in executing on its strategy, but added: “We are now in a period of dislocation – a perfect storm of challenges and changes from regulation, competitors and markets.”
While this places “huge pressure” on the banking industry, Orcel said it also offered an opportunity to reassess and make changes “to our advantage”.
Roger Naylor, global co-head of equities; Chris Murphy, Hong Kong global co-head of FX, rates and credit; and Matt Hanning, the head of corporate client solutions for Asia Pacific since 2014, will be leaving the bank.
Murphy was named rates and credit head in the 2012 reorganisation, before being put in joint charge of the new FRC team created a year later when UBS combined its foreign exchange, rates, credit and precious metals teams.
Naylor has been with UBS since 2012, and he and Robert Karofsky were named global co-heads of equities when Mike Stewart stepped away from running the equities business in September 2014.
Karofsky will now run equities on his own, while the FRC business, too, will be overseen by a single head, George Athanasopoulos, who had led it with Murphy.
Sam Kendall, UBS’s Hong Kong-based global head of equity capital markets since December 2012, takes on Hanning’s Asia CCS role spanning advisory and debt and equity underwriting work. UBS has not named a new ECM chief.
The CCS business, for the first time, will now have global co-heads in Ros Stephenson, who runs the division in the Americas, and William Vereker, who oversees it in Europe, the Middle East and Africa. They will keep their regional duties, “but are now also accountable for furthering the seamless integration of the business on a global basis”, Orcel said in the memo.
Kendall will report to the two new global heads of CCS.
In the memo, Orcel said that the changes came in response to “a period of dislocation – a perfect storm of challenges and changes from regulation, competitors and markets” that would lead to both “huge pressure” but also a “unique opportunity to reassess” the business.
He added: “Our post-accelerate world, with the continuing changes in our operating environment, demands that we create a more streamlined and efficient structure that is able to promote greater partnership, and can best support the long-term growth of our business to serve our clients effectively.”
The investment bank boss did not rule out further changes in the business, saying: “I can’t promise you that it will all be smooth sailing from now on, or that in our endeavour to further enhance the client centricity of our business we won’t have to make further adjustments. But I can promise you that as we move forward, we will be open and transparent with you on the progress and success of our strategy.”
In the first quarter of 2016, UBS’s investment bank posted revenues of Sfr1.9 billion ($ 1.95 billion), down 29% year-on-year, and said it was taking action accordingly.
In a statement sent to Financial News when those results were published, the bank said: “In response to the market environment, early and decisive action was taken, mitigating the lag effect between immediate revenue reductions and cost benefit realisation.”
It added: “The IB [investment bank] will continue to manage ‘hard and ahead’ of events, with the full benefit of actions already taken yet to flow through and further action planned.”