- Hanning also departs; co-heads take control of divisions
- Orcel cites ‘period of dislocation’ and ‘perfect storm’
UBS Group AG investment-banking chief Andrea Orcel announced the departure of three senior executives in a sweeping overhaul of his leadership team, citing the need to streamline operations amid “dislocation” from turbulent markets and increased regulation.
Roger Naylor, co-head of equities, Chris Murphy, co-head of fixed income, rates and currency, and Matt Hanning, head of corporate client solutions in the Asia Pacific region, will all step down, Orcel said in a Wednesday memo to staff whose contents were confirmed by a spokesman. The businesses will be run by the remaining co-heads, with George Athanasopoulos in charge of the fixed-income group, Ros Stephenson and William Vereker leading corporate client solutions and Rob Karofsky heading equities.
“We are now in a period of dislocation -- a perfect storm of challenges and changes from regulation, competitors and markets,” Orcel said in the memo.
Chief Executive Officer Sergio Ermotti, 55, who has shifted the bank’s focus away from investment banking in favor of wealth management, is struggling with market volatility that led to a slump in trading across the firm. The bank signaled in May that it’s looking for ways to cut costs further after reporting a 64 percent drop in first-quarter profit.
“This is obviously a hint that investment-banking results are really suffering,” as well as “another proof that co-head structures do normally not work,” said Peter Casanova, a Zurich-based analyst at Kepler Cheuvreux with a hold rating on the shares. “UBS is working diligently on its costs and also calling into question each layer of complexity.”
Profit at UBS’s investment bank dropped 67 percent to 253 million francs ($258 million) in the first quarter, the lowest total for the start of a year since 2009.
The bank’s stock has decreased 35 percent this year, tracking a slide across European financial shares. UBS extended its slump after the U.K.’s shock vote to leave the European Union last week roiled financial markets around the world.
“I can’t promise you that it will all be smooth sailing from now on,” Orcel said in the memo.
Naylor, who joined UBS from Deutsche Bank in September 2012, will stay with the firm until September. He and Karofsky were appointed co-heads of global equities in September 2014.
Hanning joined the company in 2006 from Morgan Stanley. He will be replaced as Asia-Pacific corporate client solutions head by Sam Kendall, UBS’s global head of equity capital markets, according to the memo.
Murphy joined the bank in 2009 as the global product head for rates derivatives, and was also previously at Morgan Stanley, holding a number of positions including the head of European rates trading. Both will depart after a “period of transition,” the memo said.
Orcel said Karofsky and Athanasopoulos have a “clear and firm mandate” to converge the equities and fixed income, rates and currency businesses. He also said the investment bank must become more “streamlined and efficient,” with fewer layers, as the operating environment continues to change four years after UBS decided to shrink the division and exit most fixed-income trading.
“Delivering this must start with creating an environment that empowers each of you; an environment that fosters decisiveness, cooperation and accountability,” Orcel said.
He also said Emma Molvidson will become chief of staff to the investment bank’s management committee. Bert Fuqua is taking her position as the investment bank’s legal chief.