London: Rivals are circling Switzerland’s UBS AG to poach its star deal advisors and equity specialists, as a $2.3 billion rogue trading scandal and the prospect of low or non-existent bonuses dents morale.
UBS, already raided this year after a disappointing bonus round, is a target again for competitors and up-and-coming investment banks looking to bolster their company relationship teams and research desks -- two areas the bank is traditionally good at -- industry and headhunting sources said.
“Peers are certainly circling. There has been a big cut in profits and that will affect bonuses. People will leave, there’s no doubt about it,” said one headhunter who has dealt with UBS before.
Though the alleged rogue trades revealed by UBS last week emanated from its equities division this is unlikely to put the poachers off. The bank’s equities research team has ranked number one for 11 years in a row in the Thomson Reuters Extel industry survey.
Two industry sources in London told Reuters their firms were likely to approach UBS bankers.
UBS investment bank head Carsten Kengeter has tried to bolster morale since the scandal hit, assuring staff that “clients are inundating us with messages of support.”
“We all share a sense of anger and frustration,” Kengeter said in an internal memo over the weekend in which he asked staff to act “with resolve, creativity and energy” and to “work hard to maintain our momentum.”
“I am confident that we will turn adversity into strength,” he said.
UBS staff are unlikely to jump until early next year -- though they may be first approached in the coming weeks -- as other banks will try to avoid having to compensate for forfeited bonus payments, the headhunter added.
Current estimates suggest that banks globally are driving through more than 1,00,000 job cuts to cope with the tough economic and regulatory environment, so they are unlikely to want hundreds of new recruits.
But a chance to again lure rainmakers from UBS may be hard to pass up. Several heads of investment banking at rival firms told Reuters in recent weeks, before the scandal hit, that they still had room for ‘selective hires.´
“(UBS was) brutally raided by other banks, even though they do still have a strong culture. People sensed their weakness,” said another recruitment consultant that also knows UBS well, referring to earlier departures.
US rivals such as Bank of America Merrill Lynch and Citi, which is just finalising a rebuild of its advisory business after losing staff in the financial crisis, are among those that took bankers from UBS this year.
In March BofA ML poached Matthew Koder, UBS’s head of global capital markets to its Asia Pacific corporate and investment banking division, signalling the start of a raft of high profile departures.
UBS has felt a huge upheaval in its mergers and acquisitions division, particularly in the United States, where more than 15 senior bankers left, including the head of America’s investment banking Kevin Cox.
The bank also lost two recently-promoted global heads of M&A, Liam Beere -- who went to merger and acquisition boutique Moelis -- and Cary Kochman -- who left for Citi -- in June.
Japan’s Nomura, which is particularly looking for top bankers in the United States, is another firm that will likely try to attract UBS staff.
Some of the recently-promoted division heads at UBS are among possible targets.
They include James Hartop and Nick Reid, two top dealmakers who are now joint heads of investment banking for EMEA, and Simon Warshaw, a well-known media banker who is now co-global head of investment banking.
In the United States, Aryeh Bourkoff, a telecom, media and technology specialist, was tasked with rebuilding morale in the America’s investment banking division, hit badly by defections.
On the equities front, Francois Gouws is one of the top global division heads and a former head of the renowned research group.
But long-serving UBS bankers such as Gouws and Warshaw, who joined from university in 1986, could be hard to sway.
“The investment banking franchise isn’t destroyed, and some of the veterans, even if they have a price, are very committed to UBS,” said the first headhunter.