My meeting in May was with Carsten Kengeter, the youthful CEO of UBS’s investment bank. Carsten is controversial. I suspect this is because people are jealous that he has risen so rapidly. In September 2008 when he joined UBS as co-head of FICC, after an under-the-radar career at Goldman Sachs, few people had heard of him. Two years later he is running one of Europe’s largest investment banks. I liked Carsten who was surprisingly open and good fun. I would never underestimate someone whom Ossie Grübel, UBS’s CEO and the former CEO of Credit Suisse, rates. Indeed, it was Ossie who was king-maker to Brady Dougan, the current chief executive of Credit Suisse and ranked as one of the most respected men in the financial services industry.
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| More on Carsten Kengeter: A UBS insider points out that the landscape in the securities division is flatter: ‘A layer has been removed.’ But I still think Carsten Kengeter has too many lieutenants Changes continue at UBS April 2011 |
Recently, there has been hand-wringing in the press that UBS is losing investment bankers in the States. While this is true – some 13 senior bankers left in the first three months of 2010, according to the Wall Street Journal – UBS has also hired about 11 bankers in the US. So headcount is not the issue. A mole murmurs: “It’s correct that morale is low in some of our US businesses. But that’s partly because in the US banks seem to scoop up a whole team, which leaves a hole.” For me, there are strategic questions. Firstly, does UBS need to be a big player in American M&A? Obviously this would complement its strong global equity franchise. But taking on the American banks in their backyard is an expensive and challenging endeavour. Both Deutsche and Barclays had to buy American firms just to get a seat at the table. Nevertheless, UBS may believe that to be a credible player in investment banking, it needs a presence in the US. This would allow it to offer US clients the cross-border M&A product, building on their strong Asian franchise.
Another issue is that if UBS has to rapidly hire more investment bankers in the US, it will probably have to offer guaranteed compensation packages. This will unsettle existing staff who may question what will be left in the kitty for them come Christmas. Remember, the 2010 bonus round at UBS’s investment bank was a painful process. Increasingly the water-cooler chatter focuses on potential bank lay-offs. Let’s see what the autumn brings for the markets and UBS’s investment bank. But if I were in charge, I would keep a tight rein on fixed overheads.
Abigail with attitude: Glencore – I told you so
Kengeter’s strategic quandaries
High-powered animation around the dinner table
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