Posted on 28-07-2010
UBS has reported its second quarter results and they are good. They are especially good for the bank’s
historically excellent equities sales and trading business.
When exceptional items are taken out
of the equation, revenues in UBS equities division actually rose 4%
quarter on quarter according to Dirk Hoffman-Becking at Sanford Bernstein. The
only other bank to come anywhere close was Credit Suisse, which achieved a 2%
increase (post exceptional's).
Now, you will recall that Goldman’s
equity business had a particularly dreadful
second quarter for equities trading. Goldman said this was mostly because it
failed to hedge against volatility, leading to big losses in equity derivatives
trading.
Interestingly, UBS attributed its
equities success precisely to pre-emptive hedging against volatility before the
flash crash. In response to a question from a curious Goldman analyst, UBS CFO
John Cryan said the bank’s equities business simply covered its short
volatility position, noting that they didn’t think the benign conditions at the
start of the year would last and that it was, “just good risk management.”
Given that UBS equities bankers are
clearly better than Goldman Sachs’, therefore, they can surely expect to be
generously remunerated?
Well, maybe not.
Net, UBS added only 179 staff in its
investment bank over the past quarter. However, headhunters say it’s done a lot
of hiring in FICC (fixed income currencies and commodities), on increasingly
generous packages.
Source: eFINANCIALCAREERS ( Read Article...)
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