Sbc Loses Out To Ubs In Local Ops Merger

Global investment bank SBC Warburg has lost out to UBS in its Indian operations, as part of its international merger programme. In the newly-formed entity, the equity research and brokerage operations of SBC Warburg will be downsized, with UBS having a greater role to play.

The new entity will be called United Bank of Switzerland and its equities divisions will be operated out of UBS offices from the first week of April. UBS has over the years held a strong presence in the Indian capital markets.

According to sources, in the new set-up, only two of the eight research analysts at SBC Warburg have been retained. According to reliable sources, the new Indian operations will be headed by Ajay Sondhi (formerly with Barclays Capital), who will be designated country head, while Euan Macdonald, who currently heads SBCs Indian operations will now be designated as chairman of the merged entity.

 

While the official orders are yet to be issued, the research analysts at SBC Warburg have been informally told about the decision. The research will now be headed by Subra Subramanium, who was heading the research at UBS.

The decision to this effect was announced to the employees on Wednesday afternoon after a detailed meeting. The meeting was attended by the head of Asian equities operations, Brad Orgail, and chairman of SBC Warburg (India), Euan Macdonald.

SBC Warburg had still to make a strong presence in the domestic equity market. It had earlier planned to take up an NSE card (having already tied up with Sungrace Mafatlal), but these plans have now been dropped.

There are two other divisions which SBC had: corporate finance, and project finance. Though no formal decision has be taken about these two divisions, it is likely that the SBC Warburg will also lose out in these two divisions as well.

From the eight research analysts that UBS had, two have been asked to leave, while the remaining six have been retained. Sources also informed that the compensation package for those who have retrenched from SBC will be decided in Hong Kong today and it will be provided to the employees on Monday, March 16.

The decision is based purely on commercial consideration. The two banks had decided to merge in order to form a global giant in investment banking.

SBC which had a strong base in Europe, received a better deal in Europe where almost all its employees were retained for the merged entity and 10 per cent of the UBS employees were retained.

However, for its Asian operations, where UBS has a stronger presence, it was decided to give a greater say to UBS. Thus, for operations in Indonesia, India and Philippines, it was decided to retain 80 per cent of the staff from UBS and the rest 20 per cent from SBC Warburg.