An Era Coming to an End at UBS
An era is coming to an end at UBS. When the Swiss bank announced its first quarter results in April, it revealed that the assets remaining in its non-core division had been reduced to $20.bn. That sounds like a lot, but in 2023 the unit had $84bn of assets to get rid of. Much has been achieved.
Accordingly, the people who’ve been selling off the assets in the non-core unit are moving on. Dan Chantler, a managing director (MD) who was running the linear trading team, announced last week that he’s leaving UBS after nearly 25 years. Chantler said he was proud of managing a global trading team that had been “instrumental in the greatest banking integration of our time.” Around $77bn of the initial assets in the non-core unit were the result of UBS’s forced merger with Credit Suisse in June 2023. Bloomberg reported that they initially included 30 trading positions, including Credit Suisse’s illiquid distressed debt investments.
Chantler isn’t the first person to leave the non-core unit. David Leung, head of the unit in Singapore left last October and is now at Huatai as head of fixed income trading for the region. Louise Kitchen, who joined UBS in 2022 as head of the non-core unit and who formerly ran Deutsche Bank’s similar operation, left last October.
UBS declined to comment for this article, but the departures from its non-core team appear intentional. The wind down is expected to be complete by the end of this year. At that point, people will in the unit have nothing to do.
Special Powers from Working in the Non-Core Unit
People who don’t leave UBS are finding other roles internally. Former Credit Suisse trader, Shane O’Cuinn was running the non-core unit for a while, but is now busy running UBS’s leaky macro team instead.
Some UBS insiders say working in the non-core unit has been akin to a finishing school and is the perfect preparation of a career clearing up the mess created by crisis situations. “Call it professional dismantling,” says one. ” The people who do it well are, quietly, among the most sought-after operators in wholesale banking.”
In this version of events, running down a non-core book makes you the person every bank needs to hire. “Understanding every position in a legacy book, every counterparty relationship, every funding structure and hedge chain, does not make you a specialist in endings. It makes you a specialist in complexity,” says one insider. It makes you someone, “who has seen the full architecture of a mature franchise, knows what works and what fails, and can construct something durable without repeating the mistakes embedded in the book they just unwound.”
Not everyone is so sure, though. A senior macro trader who left UBS suggests the non-core team didn’t do much. “Those guys clipped coupons,” he says. “They were given a budget of money they were allowed to lose while they got rid of risk to other banks. It was a cost centre and not a profit centre and people there were always looking to get out.”
However, others in the unit agree that time in the non-core unit endowed its people with some special powers. Chantler didn’t respond to multiple requests to comment for this article but a former member of his team said the UBS non-core unit met its KPIs a year ahead of the deadline set by by the bank. “All budgets were based on the economic value of each transaction and we only would execute based on metrics that made the exit of the position better long term for the firm,” he said. “We were a highly experienced team that had to balance effective risk management while ensuring portfolio optimisation at all times.”
Working in non-core gives you “quite a skillset” says this fan. “Often we would be managing large gamma risk moves while also structuring economic and capital efficient packages to sell.”
Writing on LinkedIn, Chantler said he has “plenty of ambition and drive left.” Banks that need the special skillset might want to get in touch.
Conclusion
The era coming to an end at UBS marks a significant milestone in the bank’s history. The non-core unit, once responsible for managing a substantial amount of assets, is now being winded down with key personnel moving on to new roles. The skills acquired in the non-core unit are seen as valuable by some, while others question the actual impact of the team’s work. Regardless, the legacy of the non-core unit will be felt in the banking industry for years to come.
Source: eFinancialCareers
