Lunchtime Links: Wait...UBS loves its investment bank

Yesterday was a day of lugubriousness for persons working at UBS investment bank. Targets were discarded, cuts were dragged blinking into the light, profits were found to have fallen by more than a third.

Redundancies seem inevitable.

Maybe the cuts will be massive? Maybe UBS would be better off with a substantially slimmer investment bank? After all, as Oswald Grubel said yesterday, as little as 50% of the investment bank as it currently stands is necessary to support UBS's other operations. Peter Thorne, analyst at Helvea, thinks, understandably, that capital-hungry FICC bankers will be first to go.

Alternatively maybe salaries need to be taken down a peg or ten: as one anonymous investment banker told The Telegraph yesterday, "They are operating a 2006 cost base on a 1999 revenue base. Their decision to raise salaries back in 2009 is really hurting them and is the root of many of their current problems."

But however bad and scabrous things at UBS become, remember this: UBS wants and needs its investment bank. New chief financial officer Tom Naratil told said yesterday that the organisation as a whole needs a "strong and competitive" investment bank.

However, as BarCap analysts point out (via The Guardian), there comes a point at which a mid-tier investment bank is no longer viable: "While a partial downsizing of some investment banking activities may be positive for leverage and mix, it leaves the tough question of how viable and how profitable a mid-sized investment bank can be. Memories of ABN Amro come to mind."

Gary Cohn would, "sometimes hike up one leg, plant his foot on a trader's desk, his thigh close to the employee's face, and ask how markets were doing." (Dealbreaker)

If you want to launch a hedge fund now, it must be a large one. (Reuters)

RBC has hired three people for financial sponsor coverage and leveraged capital markets. (Financial News)

Europe's financial centres contributed 150bn to GDP last year. (CityAm)

Vince Cable is of the opinion that banks are ripping people off. (Telegraph)

Northerly populations have larger brains. (Telegraph)

Test your vocabulary. (TestYourVocab)