Sbc, Ubs Begin Axing Staff As Merger Bites

Swiss banks SBC and UBS yesterday began cutting investment banking staff in advance of their merger, with 50 UBS corporate financiers falling under the axe.

With up to 3,000 London-based investment banking jobs likely to go as a result of the merger, the corporate finance shake-out was only the start.

Many more UBS staff are unlikely to find themselves part of the new firm and are widely tipped to bear the brunt of the cuts as SBC Waburg Dillon Reads overall investment banking superiority dominates the new entity.

An SBC Warburg Dillon Read spokesman said that of UBSs current corporate finance division, 100 people would be offered a job at Warburg Dillon Read as the joint operation will be known and 50 would not.

 

The new department will have a total of 400 professional staff, with all 300 staff from SBC Warburg Dillon Read keeping their jobs.

Malcolm LeMay and Robert Gillespie, who have been appointed joint heads of European corporate finance for Warburg Dillon Read, said there were few areas of duplication.

I dont think there are any areas which are being de-emphasised. The areas we are in are largely complimentary, LeMay said when asked if the staff not being kept on were specialists in any particular areas.

LeMay said there was particular scope for combining the advisory business in continental Europe and Germany.

The joint operation will have particular expertise in telecommunications, media, financial services, utilities as well as other areas such as industrials.

Gillespie pointed out that SBC Warburg Dillon Read was probably one of the best equipped firms to understand the challenges of merging two firms and that this experience would help in the coming months.

He stressed infighting was not expected and would not be tolerated, although he said it was impossible to say if there would be a 100 per cent success rate.

LeMay said apart from clearing up uncertainty for staff, it was also crucial to lift any question marks hanging over clients of either firm.

He said there had been efforts to talk to all clients and keep them informed of the process, adding he was optimistic there would be no conflicts of interest despite the fact the combined firms would have a very large client list.

British supermarket group Tesco Plc has already dropped UBS as its broker following the announcement of the merger with SBC because its rival J Sainsbury Plc uses SBC as its broker.

Gillespie denied suggestions that SBC Warburg Dillon Read was using a product-driven approach to its advisory work. We have held our business together and grown it by concentrating on relationships. That will always be so as long as I am here, he said.

The 100 UBS corporate financiers who were offered jobs as part of the new group on Wednesday were all expected to accept the offer and their answers would be known shortly.

But for others at the firm, the uncertainty will continue for perhaps two more weeks as the long consultation process drags on. Their fate is expected to be known before long, with February 23 mentioned in some quarters as a possible date for an announcement.

So-called back office support staff are tipped to be worse hit by the merger in London as the firms attempt to eke out the benefits of the deal.

The merger has been given the go-ahead by shareholders at both UBS and SBC and assuming it gets regulatory approval, could be a reality by May.