UBS lets top Asia bond duo go

UPDATED: UBS lets veterans Paul Au and Patrick Liu go, reflecting a strategic shift in focus towards building a trading-oriented platform in the secondary markets.

UBS's Asia ex-Japan head of credit market syndicate, Paul Au, was let go by the bank on Monday, according to sources familiar with the situation. His origination counterpart, Patrick Liu, co-head of Asia debt financing group, also departed the same day, the sources added.

A Hong Kong-based spokesman for UBS confirmed the departures on Tuesday. 

The departures come less than nine months after the Swiss lender created a new Asia debt-financing group by merging its debt capital markets and leverage finance operations in the region in March.

It is not immediately clear whether their departures are related to UBS's recent efforts to restructure its China business, moving about 20 junior bankers out of their China-focused country team and investment banking unit, placing them into sector-focused teams.

Since restructuring in 2012, UBS has put more emphasis on expanding its wealth management businesses, shifting its focus away from making deals.

But their departures still sent shockwaves through investment-banking peers in Asia, given the bank had done fairly well in the regional debt capital markets and China's onshore interbank bond market.

According to a person familiar with UBS's thinking, their departures highlight a strategic shift in business focus towards building a trading-oriented platform in the secondary markets, as demand for tailor-made solutions has grown significantly in the past year. 

UBS will seek internal and external candidates for the Asian syndicate, though the preference is to fill the position internally to meet growing demand from European issuers seeking to tap Asian investors, the person said.

“There is a significant pick-up in private placements and medium-term notes between European issuers and Asian investors,” the person commented. “There have been a number of transactions targeting Asian investors from Hong Kong, South Korea to Taipei.


Leaving: Paul Au

“This trend is common not only in debt capital markets but also in (cross-border) M&A activities as a push for diversification in assets and investor base led to a shift in cultural and strategy at UBS,” the person said.

For the origination business, UBS is in talks internally with its China and sector-focused teams to replace Liu, the person said, adding that the bank had also shortlisted a few external candidates for the China-focused position.

According to Dealogic, UBS ranks 8th in the Asia-Pacific ex-Japan DCM league table so far this year, underwriting $10.3 billion worth of G3 bonds.

"It was surprising to me as UBS has focused on building its China franchise in both equity and debt markets," said a senior banker who worked with Au on a recent bond offering. "Their departures should not be related to market conditions nor business performance as they have already surpassed their deal targets for this year."

The regional credit team will be headed on a temporary basis by Gaetano Bassolino, head of DCM and client solutions for Asia-Pacific region, an internal source told FinanceAsia on condition on anonymity. Bassolino relocated to Hong Kong from London in November last year.

UBS has also hired two senior traders to strengthen its regional credit trading franchise. Conor Yuan, formerly with Citi, will heading the Asia credit team and focus on investment-grade trading, while Kelvin Zhao, formerly with Goldman Sachs, will focus on high-yield trading across the region.

Zhao will report to Yuan and Yuan reports to Anthony Hall, Singapore-based head of foreign exchange, rates and credit in Asia-Pacific. Both of them will be based in Hong Kong.

Au joined UBS in June 2010 as a managing director in charge of the bank's debt syndicate for Asia. Prior to that, he was a director with with Citi between 2002 and 2010.

Before joining UBS in 2009, Liu worked in the DCM teams of Merrill Lynch and Credit Suisse and spent his career in corporate finance in Singapore and credit lending in Beijing.

Neither Au nor Liu could be reached for immediate comment. 

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