Morning Coffee: Bereft of terrifying boss, UBS bankers become lethargic. Deutsche Bank re-sharpens the knife

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UBS has now slogged through two full quarters without its polarizing and fiery investment banking chief, Andrea Orcel, who left in September to become the next chief executive of Santader before the deal ultimately fell apart. The investment bank posted a $47 million loss in the fourth quarter of last year before seeing its pre-tax profit nosedive 64% during the first three months of 2019. Some bankers at UBS believe the poor performance is at least partially owed to the void left by Orcel – even if they didn’t actually like working with him.

“We’ve had two terrible quarters and we could have done with Andrea here,” one UBS banker told the FT. “He had his hands around 10,000 throats…I’m not as ‘on it’ as I was when he was here; I was terrified before. He’s very difficult to replicate.” What a rollercoaster of a quote…

Taking the role in 2012, Orcel earned due credit for turning around UBS’s investment bank, making it more efficient while also retaining top dealmakers and landing big-name clients. But his demanding personality and desire to have his lieutenants equal his legendary work ethic turned off more than a few UBS employees, though not all, apparently.

“They have stopped putting pressure on the organization, there is a lack of relentless drive,” a second banker told the FT. However, supporters of Orcel’s replacements, Piero Novelli and Robert Karofsky, believe that the change in culture has benefited the bank. Resignations in the advisory and capital markets unit have been cut in half since Orcel departed, they said.

Of course, the last two quarters have been marred by difficult markets conditions and economic uncertainty that has negatively affected every major firm. Still, UBS’s investment bank has performed particularly poorly based on its pedigree, resulting in a $372 million reduction in the bonus pool for the first quarter and a cost-cutting plan that is being described more as a “fine-tuning."  Whether Orcel’s aggressive leadership style would have improved recent performances is up for debate. All we really know is that some current UBS bankers seem to miss getting publicly chastised while walking on eggshells.

Elsewhere, Deutsche Bank is finally headed down what seemed like an inevitable path following the breakdown in merger talks with fellow German lender Commerzbank. Chief executive Christian Sewing has pledged to make additional “tough cutbacks” in what is being described as the most radical overhaul of Deutsche Bank this century. Expect significant shrinking of its U.S. investment bank with equities trading seeing the brunt of the carnage.  


Asset manager Legg Mason is cutting 12% of its staff, or roughly 120 people. Four top executives are also leaving the firm’s management committee as it seeks to cut costs alongside other asset managers. (Bloomberg)

Four of the top 10 best-paying companies in the U.K. are large investment banks, led overall by Credit Suisse. The other six are tech companies, including Google at number 10. (CNBC)

Richard Manley, Goldman Sachs' co-head of equity research in Europe, the Middle East and Africa, is retiring. Fellow co-head John Sawtell will take sole ownership over the role. (Business Insider)

While no numbers were disclosed, credit traders at Goldman Sachs have reportedly lost big money on a default-swaps wager over an oil contractor. The once “sure-fire” derivatives bet is likely to be one of the biggest “duds” of the second quarter for Goldman’s leveraged-finance trading team, according to the report. (Bloomberg)

Just how messy and drawn out could the multibillion-dollar 1MDB bribery scandal become? U.S. prosecutors are working on handing over a staggering one million evidentiary documents to the lawyers of Roger Ng, one of the former Goldman Sachs bankers facing criminal charges linked to the case. They are being forced to deliver the documents on a rolling basis, which could affect the Malaysia’s agreement to temporarily surrender Ng to U.S. authorities for just 10 months. Ng’s lawyer didn’t rule out a plea deal, which would save a lot of billable hours. (Reuters)

Barclays has hired Morgan Stanley’s Taylor Wright as its new co-head of U.S equity capital markets. Wright will join former Deutsche Bank exec Kristin DeClark, who is set to start as fellow co-head of U.S. ECM and the global head of tech ECM next month. (Business Insider)

J.P. Morgan Chase has severed ties with Purdue Pharma over the OxyContin maker’s alleged role in the U.S. opioid crisis. The move comes two months after hedge fund Hildene Capital said it would no longer manage the personal wealth of the beleaguered Sackler family, which controls Purdue Pharma. Regional bank Comerica has reportedly stepped in as the pharmaceutical company’s new commercial bank. (CNBC)

Japanese bank Nomura promoted just 14 people to managing director following a series of job cuts across its sales and trading and investment banking teams. (Financial News)

HSBC has opened two data and innovation labs in London and Toronto that will house 150 employees and development partners. (FinExtra)

Hedge-fund manager David Tepper plans to return client assets and turn Appaloosa LP into a family office that will manage his personal wealth. Tepper purchased the Carolina Panthers last year and plans to spend more time managing the NFL team. Appaloosa employees are said to be interviewing, though some have been offered to stay with the firm as it transitions to a family office. (WSJ)

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