We will rehire and rebuild, says UBS global chief over Barrenjoey raids

The global banking boss said UBS was committed to Australia and would restock its ranks after raid by local rivals, including Barrenjoey.

Ralph Hamers, chief executive officer of UBS Group AG, at the company's headquarters in Zurich, Switzerland. Picture: Bloomberg

UBS global chief executive Ralph Hamers has highlighted the Swiss bank’s record first-quarter Asia Pacific earnings, and vowed to rebuild and strengthen its position in Australia after losing a host of staff to new local rivals.

Mr Hamers, who started in the top job in September after a stint as ING chief executive, said UBS was committed to Australia and would restock its ranks after poaching by local firms, including Barrenjoey.

“We are not happy with what Barrenjoey is doing on one side, and on the other side it’s clearly a confirmation of the strength of UBS,” he said on an earnings call. “We will rehire to rebuild and strengthen.”

Mr Hamers wouldn’t comment on specific retention arrangements for 2021 to fend off further poaching of its investment bankers, research analysts and equities staff in Australia.

Matthew Grounds, often dubbed the ‘rock star banker’ and formerly head of UBS in Australia, joined Barrenjoey earlier this month. He reconnected with a string of former UBS colleagues at the firm including Guy Fowler and Chris Williams, and the firm has embarked on a hiring spree across the market.

Barrenjoey had an implied valuation of almost $400m at the time of launch and has combined capital backing from Magellan Financial Group and Barclays.

The league tables don’t yet reflect any damage to the UBS local business. The firm ranks second this year on Australian equity capital markets deals, up from fourth as at April 27 2020, according to Refinitiv data. For mergers and acquisitions work UBS is in top spot, up from ranking 12th at the same time in 2020.

On Tuesday, UBS lured longstanding JPMorgan analyst Shaun Cousins to lead its retail and consumer research coverage, as part of its strategy to plug key gaps in its team.

Sources said Mr Cousins – who was rated a top analyst in the latest Peter Lee survey – would join UBS in July. He replaces Ben Gilbert who decamped to Jarden, which is also scaling up locally.

UBS ranks second this year on Australian equity capital markets deals. Picture: AFP

UBS on Tuesday reported a 19 per cent increase in the Asia Pacific region’s profit before tax to $US900m ($1.16bn) in the March quarter, versus a year ago. The result was helped by improved investor sentiment and economic activity during the period across the wealth management unit and investment bank.

The cost to income ratio across the Asia Pacific printed at 63 per cent.

Globally, UBS posted a 14 per cent rise in net profit to $US1.82bn, despite the result being hit by $US434m associated to losses the firm booked due to the unravelling of hedge fund Archegos Capital.

Mr Hamers said UBS was undertaking a sweeping review of risk management processes to assess the fallout from Archegos and what went wrong to lead to the exposure.

He said the bank was seeking to bolster transparency around customer trading positions, and how they were built up, and better identify market indicators and other “early warning signals” of extreme risk taking.

“The unwinding of a highly concentrated position, with many different banks involved, leads to a shock effect to the market of those shares,” he said.

UBS is reviewing its prime brokerage and family office customer relationships in light of the Archegos incident.

“We are all clearly disappointed and are taking this very seriously,” Mr Hamers said.

Rival firm Credit Suisse has borne the brunt of the Archegos collapse with US$5.5bn in losses tied to the hedge fund’s demise.

Morgan Stanley and Nomura are among other banks that have also unveiled exposures to Archegos.

On another collapse which is causing a stir in global markets, Mr Hamers said UBS didn’t have any exposure to defunct financier Greensill Capital. He noted, though, that the firm did closely assess the impact and actions of its peers when those events filtered through the financial system.

“You do a read across... you have to analyse,” he added.

Mr Hamers also said higher asset prices globally were expected to have a positive effect on UBS’s recurring fee income, but cautioned of lingering uncertainty about the economic recovery.

He labelled the UBS balance sheet “for all seasons” and noted the common equity tier one capital ratio rose to 14 per cent, above guidance pitched at about 13 per cent.