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Morning Coffee: UBS’s dire warning on London banking jobs. Firing bankers doesn't work

Right then, Sergio Ermotti has been making some serious statements about the impact of Brexit on UBS’s London headcount – 30% of people could go, or around 1,500 people.

"We currently employ more than 5,000 people in London, and probably 20% to 30% of our workforce could be affected," he said in an interview Nikkei, reported by Bloomberg. "We believe that London will continue to be an important financial centre, although maybe not as important as it is today."

This doesn’t strictly sound ‘on message’. Sentiments coming out of investment banks since the Brexit vote on 23 June have shifted from warnings of drastic cuts to purring corporate platitudes about the importance of maintaining their London operations.

But as key allies of German chancellor Angela Merkel make public statements about the impossibility of maintaining single market access without free movement of people, the City’s hopes of ‘passporting’ into the EU hang in the balance. And investment banks have been continue to formulate their plans to move people out of London if it all goes wrong anyway.

Separately, investment banks keep on firing people, but this is going to change very little over the long term. The issue with banks isn’t just about propping up revenues – it’s about the lack of profitability, suggests the WSJ.

And even though they’ve extracted 7,900 front office employees since 2011, revenues per client facing employee have largely held up over the same period.

Cutting pay and chopping headcount will help to some extent, but the problems remain – particularly for European banks and, most of all, Deutsche Bank, suggests the WSJ.

Regulatory pressures, stubbornly low return on equity and high regulatory costs – coupled with the low interest rate environment and political uncertainty – means, of course, that banks need to make some tough choices on disposing of assets. So, they’re sure to stop firing people…


How do you get an insight into a private tech start-up? Send an analyst to cover it anyway (Financial Times)

Goldman Sachs has banned its partners from making political donations in for U.S. election candidates (Politico)

Goldman and Morgan Stanley think the UK will be OK. Sort of. “Previously, we had expected an immediate reaction to the vote to leave, but, in practice the reaction has been muted, or rapidly reversed. Current resilience will be undermined over time by firms holding back on investment and hiring.” (Bloomberg)

Credit Suisse, Citi, RBC Capital and BMO Capital Markets just got $100m from a $43.3bn deal to sell Spectra Energy (Business Insider)

An analyst who covered Greenhill Advisers has just joined as its first head of investor relations (Bloomberg)

What Goldman Sachs interns want out of life (Business Insider)

Brexit means office space in the City of London will be cheaper (WSJ)

Michael Hafner, head of energy investment banking for EMEA at UBS, has left (Bloomberg)

Meet the hedge fund that invests in cannabis (Business Insider)

Robots are really our friends (Bank of England)

You need a dog in your office (Bloomberg)

AUTHORPaul Clarke

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