A cultural revolution is under way at UBS under new investment bank boss Andrea Orcel, who has lifted morale by bringing in clients but raised fears among old hands at the Swiss bank that they will bear the brunt of expected lay-offs.
The man behind some of the biggest banking deals of the last decade, including the ultimately ill-fated acquisition of ABN Amro by Royal Bank of Scotland in 2007, was brought in to help UBS rebound from a rogue trading scandal last year which cost it $2 billion and had a damaging effect on morale.
A prominent merger and acquisitions specialist poached from Bank of America Merrill Lynch, Orcel has made his mark since he was hired in July by UBS Chief Executive Sergio Ermotti to work alongside former bond trader Carsten Kengeter.
Orcel has already created a circle of former colleagues who have followed him to UBS. This could yet expand, insiders at the Swiss bank believe, with further staff reshuffles likely.
Like other investment banks, UBS is not in a position to hire more staff as fee income is under pressure from a drop-off in advisory work and trading volumes, though looming job cuts could make room for new blood.
Ermotti, also new to his role, has decided not to shut the Swiss bank's investment banking division but instead to pare it back, while retaining the functions needed to serve wealthy individuals and traditional corporate clients.
A source close to Orcel said job losses have yet to be finalized, but investment bankers who spoke to Reuters on condition of anonymity said they fear 15 percent of the advisory division in Europe, or about 75 to 90 people, will be cut.
UBS declined to comment on any plans and said Orcel was not available.
Beyond the merry-go-round of personnel, subtle cultural changes are taking shape, as Orcel's way of doing business and his expertise in advising clients from emerging markets or financial institutions take root.
Known for winning deal mandates thanks to his strong ties to clients, Orcel has for instance impressed colleagues by securing a better, lead role for UBS on the listing of the Mexican unit of Spanish bank Santander, one of his biggest customers.
But Orcel also expects the same of his co-workers and values individual performance, four UBS insiders said. Former BofA ML colleagues agreed, saying he was a fantastically effective banker known for his aggressive style.
This jars with a UBS corporate finance franchise built on a collegiate culture, which many still associate with SG Warburg, a respected British merchant bank absorbed by UBS more than 15 years ago and where some of the firm's dealmakers began their careers.
"UBS is likely to be very individual and client-driven, exactly like Andrea himself. The focus on big clients and places where they can make revenues is going to be reinforced," said one former senior UBS banker who remains close to colleagues there.
The advisory unit focused on financial institutions is one area where changes have been most evident, with former BofA ML banker Javier Oficialdegui joining to jointly run it, while the team focused on industrial companies could also be beefed up, the former UBS banker said.
DISPELLING DOUBTS
Many long-standing UBS bankers have so far welcomed the shake-up, cheered by the prospect of a revenue boost and renewed purpose after rivals were quick to dismiss the Swiss bank in the wake of the trading scandal last year.
"We continued to have competitors raise doubts to clients about us, which was frustrating, and Andrea's arrival has drawn a line under that," a senior UBS banker said.
With Swiss regulators bearing down on UBS after its $2 billion unauthorized trading loss, and in the wake of a state bailout in the 2008 financial crisis, the bank has faced repeated questions over whether it should be in investment banking at all.
A plan devised by Ermotti, promoted to CEO after the scandal, to prioritize wealthy clients and tailor the investment bank to their needs while pulling back some risky activities, has so far helped calm that debate.
Like competitors, UBS has also been hit by euro zone woes causing a slump in trading revenues and deal fees which is forcing an industry-wide rethink of business models.
In corporate finance, teams are being redesigned, with some firms deciding to focus on a smaller number of key sectors, or like at Goldman Sachs, junior bankers being asked to multi-task.
That has also made UBS bankers more open to any further changes Orcel might want to bring in, even if some worry they may not be around to see these through, or that UBS's own cultural traits, valued by some clients, could be lost.
"UBS is known for its more understated manner but very professional, quality-first advice, deriving from the Warburg culture, and if you rip up that you can't get it back," said one former colleague of Orcel's at Merrill Lynch.
Few believe that a clear-out would affect prominent Warburg alumni such as Simon Warshaw, global co-head of investment banking at UBS, also well known for his ties to media clients.
But some more junior UBS bankers, or those in areas such as financial institutions where former colleagues of Orcel have landed, said they felt they were likely to bear the brunt of any changes.
"It's a good thing that Andrea's joined, he's really very good," said one senior UBS banker in London. "But it's true that he's very tribal and that he will try to surround himself with people he trusts and that he rates."
