Investment bankers are now free to flood out of UBS

Let the outflow begin: as of last week, headhunters say UBS's investment banking staff have banked their (allegedly paltry) cash bonuses for 2012 and are ready and willing to leave the bank.

"Cash bonuses hit their accounts on March 25th," one fixed income headhunter told us, speaking on condition of anonymity. "A lot of UBS fixed income people are trying to leave and already under offer. You will see around 20% of their fixed income people leaving over rest of this year," he predicted.

UBS declined to comment on the likelihood of an investment banking staff exodus. However, another fixed income headhunter in London told us he'd also been having conversations with fed up UBS fixed income salespeople and traders. "Their previous years' bonuses vested last week, making them cheaper for other banks to buy out. Twenty or thirty people are going to leave in the next few months," he told us.

In October last year, UBS announced plans to close substantial parts of its fixed income business and to cull 10,000 jobs over the years to 2015. As we noted in January, former UBS fixed income people have since turned up everywhere from Goldman Sachs to Mizuho, Bank of America and Stormharbour. Headhunters said BNP Paribas, HSBC, Morgan Stanley, Scotiabank, and Royal Bank of Canada are also interested in hiring people leaving UBS's fixed income business.

UBS's departures aren't restricted to salespeople and traders. Allegra Berman, former co-head of debt capital markets (DCM) at UBS left last month after taking a sabbatical. UBS's ability to sustain a primary DCM business without a big secondary fixed income sales and trading operation has been questioned by analysts at Deutsche Bank, who said in January that the Swiss bank's DCM strategy was impractical. Figures from Dealogic show that UBS ranked outside the top ten both globally and in EMEA for debt capital markets revenues in the first quarter of 2013.

Dirk Becker, an analyst at Kepler Capital Markets in Frankfurt, told it won't be a massive surprise if people flood out of UBS now that their bonuses have been paid. "UBS has announced that they want to exit large parts of the investment banking business and are no longer a bulge bracket firm in investment banking. They're just not an attractive employer any more - all the people who can find jobs elsewhere will do so. This is something that the market really underestimates," said Becker.

Headhunters said the most disaffected people of all at UBS are in fixed income sales. UBS salespeople allegedly received bonuses equal to just 20-30% of what they were expecting. Fixed income traders were reportedly well looked after by comparison. People working in the non-core business - comprising assets UBS wants to exit - are also said by headhunters to have been deeply disappointed with their pay.

One DCM banker who left UBS this year told us the Swiss bank shouldn't be written off yet, however. "People are concerned about the future of the firm, but they haven't exited the trading and distribution of fixed income securities entirely. It doesn't matter if some key people leave - the bank is much stronger than one individual," he added. Another UBS insider said the talk of good staff leaving is just chatter: "The best people got paid. If people didn't get paid, they need to ask themselves why that was," he said.