UBS thrilled investors with its plan to de-risk investment banking by cutting fixed income to focus on equities and advisory. The mega boutique that is left could potentially resemble a jumbo Evercore Partners. The snag is that this rump will need a lot of love to be a destination employer again.
After a 20-per-cent rise in UBS’s shares since the plan leaked in late October, most investors won’t fret if the investment bank misfires in the short term. They will put their faith in chairman Axel Weber, who says his tenure at the Bundesbank showed him how redrawn financial rules will affect investment banks. And, most importantly, UBS has first-mover advantage in executing its radical reshaping. That will be especially helpful in selling down now non-core credit positions.