Will the UBS $2.3 billion rogue trading loss impact hiring of new traders?
As UBS deals with ongoing criticism over how it could have allowed one trader to lose what now appears to amount to $2.3 billion dollars, a new debate is emerging over how this could impact the future hiring of traders, not just at UBS but all securities firms vulnerable to such losses.
While there could be some psychological fallout and increased scrutiny in the short term, Richard Lipstein of Boyden Global Executive Search in New York believes market forces already have slowed down the hiring of traders, while new regulatory restraints have sought to reign them in.
In fact, Lipstein says the rogue trading scandal at UBS should have more of an impact on employer policies for enforcing rules for current employees than vetting new traders.
Gunslingers no more
"Traders aren't the gunslingers they were a few years ago," says Lipstein, who observes that Dodd-Frank and other regulations have decreased the amounts put at risk.
With few exceptions, Lipstein says, trading has made less money than it did just several years ago, with less attention paid to these businesses and less hiring occurring over the past three years.
There are not as many trading positions available, and given the supply and demand equation, it's likely that even Kweku Adoboli, the 31-year-old Ghanaian who has been charged criminally in the UK with fraud and false accounting in the UBS case, had a "squeaky clean record" when he came on board at the firm, says the recruiter.
"I can't imagine the due diligence will get any more stringent," added Lipstein, observing how extensive due diligence is already when a new employee is hired by a financial institution.
The smart employee can always commit what he or she thought was the "perfect crime."
"It's more a question of how much oversight bank regulators have now and what lessons they can learn," he says.
No one seems to have been let go from UBS's risk team yet, writes our UK Editor Sarah Butcher. When they are, she adds, some may be able to find work at RBS.
Butcher quizzed numerous risk recruiters on whether they're receiving resumes from risk people made redundant from UBS. The answer is: they're not. Even though Carsten Kengeter has declared that he's "doing everything" to review the shortcoming in the bank's risk controls, it seems he has yet to do dismissals.
This may change after the board meeting in Singapore. Then again, it may not. UBS CEO Oswald Grubel has said nothing can be done when someone acts with "criminal energy" and Mark Sanborn, chief risk officer at UBS's investment bank, only joined five months ago and can surely be absolved of any blame.
In the event that UBS does go for another wholesale rearrangement of its risk function, recruiters say not to worry; other banks are still hiring.
"Banks are still very interested in recruiting in quant risk, counterparty valuation adjustment and counterparty credit risk," says Priya Mariannie at recruitment firm the PSD Group.
"Due to regulatory pressure, redundancies are unlikely in risk departments," suggests Adrian Marples at search firm Leathwaite International. "However, risk hiring is limited to roles that are business critical."
One bank still doing a fair amount of risk hiring is apparently RBS, which started assimilating lots of new risk people last year. It's hiring 15-20 senior VPs in quant risk, according to one recruiter.