Toomre Capital Markets LLC

Real-Time Capital Markets -- Analytics, Visualization, Event Processing, and Intelligence

UBS Restructuring FICC Division

On Thursday January 22nd 2008, UBS announced that it is "finally" restructuring its Fixed-Income, Currencies and Commodities division ("FICC"). Part of the change involves completely closing down its real estate and securitization businesses as well as its exotic structured products operation. These changes are "part of a radical change that is needed to take FICC forward" announced Carsten Kengeter and Jeff Mayer, joint heads of FICC who arrived late in 2008.

As part of the restructuring, Sascha Prinz and David Sacco, global co-heads of the rates business, Chris Ryan, global head of credit, and Todd Morakis, global head of commodities, are leaving the bank. There are part of the changes announced by Jenker Johansson that "will enable us to leverage our core strengths while relying on lower risk and balance sheet utilization."

According to the memo announcing these changes, UBS is repositioning its investment bank, with the overriding strategy about emphasizing client business on "facilitation and flow," as well as providing strategic and tactical solutions with less reliance on the bank's balance sheet. Under the restructuring, the existing products areas in the FICC division are to be consolidated into three new business areas - macro, credit and the workout group.

The macro group will include foreign exchange, money markets and rates, and will be co-headed by Reto Stadelmann, who will focus on foreign exchange, and Yvan Ducrot, who will manage the rates side of the new division (which includes mortgage agency pass-through trading). Credit will, temporarily, be managed by Kengeter in close co-operation with the existing core management team from across the credit business. The workout group will, temporarily, be headed by Mayer and will be responsible for managing the unit closures. In addition, emerging markets will be a joint venture between macro and credit, and will be run by Ritesh Dutta, who will report directly to Kengeter and Mayer. Within FICC client services, global sales will be co-headed by Roberto Isolani and Fabian Shey.

Toomre Capital Markets LLC ("TCM") above used the term "finally." Back on December 7th 2007 in the post UBS: What's Another $10 Billion Dollar Loss Worth? , "Why the heck did UBS and Citigroup stray from their previous focus on serving customer needs? Were the enormous profits of Goldman Sachs (and the competitive need to keep up with the proverbial "Jones'es") so seductive that management threw all good judgment to the wind? Shareholders yet again are paying for the "heads management and employees win, tails everyone loses" behavior of Wall Street." TCM feels that this reorganization is being implemented more than a year late and is much needed. Reader thoughts and comments are welcome.