c.2013 New York Times News Service
c.2013 New York Times News Service
LONDON — The Swiss bank UBS is combining its currency, interest rates and credit trading businesses into one unit, according to a memo circulated at the bank earlier this month.
The move comes as UBS has undertaken efforts in the past year to shrink its investment bank and shift focus away from riskier trading activities to its wealth management and retail operations. The bank cut 10,000 jobs last year as part of the overhaul.
Chris Murphy and George Athanasopoulos, both members of the investment bank’s executive committee, will head the combined operations, according to the memo, which was distributed at UBS on Nov. 19. UBS has confirmed the contents of the memo.
Chris Vogelgesang, co-head of global foreign exchange and precious metals trading, will step down and is exploring other opportunities at the bank, according to the memo. He will work closely with Murphy and Athanasopoulos during the integration.
Vogelgesang headed the currency trading business at UBS, which is one of more than dozen banks facing inquiries by regulators into possible manipulation of the foreign exchange market. UBS declined to comment on whether his departure was related to the currency trading investigations.
But a person familiar with the bank’s thinking said that Murphy and Athanasopoulos were expected to complement each other in the combined business. Athanasopoulos, formerly co-head of foreign exchange and precious metals, has a sales and distribution background, while Murphy, formerly head of the rates and credit trading business, has a trading background like Vogelgesang, the person said.
“The integration is not a change in strategy, rather a natural evolution of what we are trying to achieve,” the memo said.
Both the foreign exchange business and the rates and credit trading operations at UBS had been slimmed down as part of the bank-wide restructuring in the past year. No further headcount reductions in those businesses are anticipated.
Credit Suisse, Switzerland’s second-biggest bank after UBS, announced a similar move earlier this month combining its foreign exchange, rates and commodities businesses into a new division, according to an internal memo circulated Nov. 15. The bank also has cut positions in its fixed income business in recent months. Credit Suisse has confirmed the contents of the memo.
Swiss regulators have required Swiss banks to hold more capital and adopted tighter regulations designed to prevent a bank from being labeled “too big to fail” in the future. Swiss taxpayers injected billions of dollars into UBS during the crisis.
Both Credit Suisse and UBS have announced plans to “ring fence” parts of their businesses in hopes of shielding their retail clients and protecting each bank from the impact of problems in a single unit in the event of another financial crisis.
On Thursday, the banks announced that they have formed a new business group called the Swiss Finance Council to help Swiss financial institutions shape policy issues as they are debated in the European Commission, the executive arm of the European Union. The new council, which will work with the Swiss Bankers Association, was formed ahead of the upcoming European parliamentary elections next year.
UBS and Credit Suisse are among more than a dozen banks that are facing inquiries by regulators in the United States, Europe and Hong Kong into the $5-trillion-a-day currency trading markets.
Twelve traders have been placed on leave at various banks pending the outcome of the investigation and several banks are considering limiting the use of chat rooms, which is an area of focus for regulators exploring potential collusion in the market. None of the traders has been formally accused of wrongdoing.
UBS and Credit Suisse are both internally reviewing their foreign exchange operations as a result of the investigations.
Earlier this week, UBS restricted the use of chat rooms by its traders, banning so-called multidealer chats where traders from several banks can congregate and social chat rooms, according to an internal memo. Single-client chats are allowed with written approval, and all chats must be conducted on UBS’ internal systems, according to the memo.
The chat restriction is not related to the merging of the foreign exchange, rates and credit trading businesses.
Despite its size, the currency-trading market is largely unregulated and dominated by a handful of banks. Deutsche Bank, Citigroup, Barclays and UBS account for about half of all trading.