UBS splits top investment bank job after Orcel’s departure
ZURICH: UBS Group AG’s investment bank was dealt a fresh blow as Andrea Orcel ( pic), the top rainmaker at a business that’s lost much of its clout in a shift toward wealth management, left for Spain’s Banco Santander SA.
The Swiss bank promoted two executives to jointly lead the investment bank, splitting the role held by Orcel, it said late Tuesday. Piero Novelli, currently executive chairman of corporate client solutions, will focus on advising clients on capital raisings as well as mergers and acquisitions. Robert Karofsky, global head of equities, will oversee trading.
Orcel, who at one point was seen as a potential candidate to replace Sergio Ermotti as chief executive officer of the Swiss lender, is leaving after six years in a surprise move to become CEO of Santander, a bank known for its retail business. In splitting his role, Ermotti is putting two relatively unknown bankers in charge of a securities unit that’s contributing a shrinking share of revenue under a so-called capital-light model.
“Having two people with lower profiles is perhaps what they wanted,” said Peter Hahn, a professor at the London Institute of Banking & Finance. “When they brought Orcel in, there was a keen effort to show that they were committed to investment banking, they needed to prove that. Today they feel comfortable appointing two guys who are already there.”
UBS fell 1.3% at 9:12 am in Zurich trading, leading European banks lower. Santander was little changed in Madrid.
Orcel was leading an investment-banking business that faced shrinking resources, as both the unit’s assets and the share of revenue reserved for staff compensation dropped over the past five years. The firm has failed to crack the Top 10 globally this year in fees from advising on mergers and acquisitions, according to data compiled by Bloomberg. It was the No. 7 adviser in 2007.
Orcel has worked to make his division lean and profitable, rather than focusing on building scale. At the same time, smaller rivals like Evercore Inc, which have paid more for bankers, surpassed UBS on so-called league tables.
Top dealmakers at the US investment-banking division were informed of Orcel’s departure in a conference call around 11 a.m. New York time on Tuesday, just before the move was announced, according to people familiar with the call. Orcel was widely seen to have wanted to CEO position at a large financial firm, the people said.
The co-head structure mirrors that of the wealth-management business, which is run by former Commerzbank CEO Martin Blessing and Tom Naratil. Blessing and Orcel were considered potential successors for Ermotti, even as UBS chairman Axel Weber said earlier this year that the CEO had indicated he would stay until 2022.
Orcel said in a 2015 Financial Times interview that if he could be CEO of any bank, “UBS would be a good place to start.”
“Life is a series of hellos and goodbyes, but still this moment is bittersweet,” Orcel wrote in a memo to employees.
“I wouldn’t have left for anything less than a client I have been advising and working with my whole career.”
His move risks accelerating turnover at a UBS unit that has seen a number of departures this year. About a half dozen bankers joined Rothschild in North America to work for UBS veteran Jimmy Neissa. — Bloomberg