Manisha Girotra, who was head of UBS in India, has resigned and the Swiss bank has appointed Aashish Kamat to replace her. The departure comes amid a downsizing at both UBS and Credit Suisse, which some sources say is focused on reducing investment banking.
Girotra was a UBS veteran who worked with the Swiss bank for more than a decade. She was head of UBS Securities in India until 2009, when the Swiss bank launched full-fledged banking operations in India, and thereafter became group CEO for India. Under her watch UBS has built an enviable position in investment banking in India and, specifically, is considered a force to reckon with in cross-border M&A. Girotra is leaving to pursue something more entrepreneurial, local Indian media has reported, and will not be taking a job that places her in direct competition with her earlier employer.
“We would like to thank [Girotra] for the enormous contribution she has made to our India businesses since joining UBS in 1998, especially in developing our relationships with key corporate and institutional clients, the Indian government, regulators and other stakeholders,” said UBS in an internal memo that FinanceAsia has seen. Girotra headed investment banking for Barclays in Delhi before she joined UBS.
Kamat, who has been with UBS for less than six months, has been designated successor to Girotra. He is currently based in Hong Kong and will relocate to Mumbai. “His primary focus will be on continuing to build our existing client franchise, as well as expanding into new client segments and product offerings to enhance revenue opportunities,” said the memo. Kamat joined UBS in June 2011 in a newly created role as chairman of financial institutions coverage for the investment bank in Asia-Pacific. Kamat was chief financial officer and chief operating officer for J.P. Morgan in Asia-Pacific until he left in October last year.
There have been other senior-level departures at UBS in India this year. Ganeshan Murugaiyan, who was head of investment banking, left in the summer to take on a wider remit at BNP Paribas as head of corporate banking for India. Murugaiyan joined UBS in 2006, from Bank of America Merrill Lynch. UBS promoted Ashok Mittal, who was hired as UBS’s chief representative for India in 2009, to head of investment banking to replace Murugaiyan in June. Mittal joined UBS from Lehman Brothers and has also worked at HSBC. Purvesh Shah, who was head of capital markets for India, departed for Barclays Capital.
The India departures come at a time when investment banking across UBS is facing a difficult time. Investment banks are grappling with a new operating paradigm as a reduction in the availability of leverage and increased capital requirements hurt revenues. The Swiss banks, in particular, have significantly shored up capital in response to stringent regulations in their home market.
UBS had 16,860 people working in investment banking at the end of 2010, of a total employee strength of 64,617. This was up from 15,666 at the end of 2009 and down from 19,312 at the end of 2008. “In 2010, our recruiting efforts focused on meeting the growing demand for staff,” said UBS in its annual report for last year. “Hiring was most visible in the investment bank, with 2,360 positions filled in 2010.”
This year, while announcing second-quarter results, UBS committed to cost-cutting measures, which included headcount reductions of around 3,500. Around 40% of the reduction was in the investment bank. This will take total headcount in the investment bank to below 2009 levels.
However, the investment bank was further affected in September when it emerged that a rogue trader had caused losses of $2.3 billion at UBS. In the aftermath UBS group CEO Oswald Grübel resigned on September 24.
“We are committed to further expanding our already leading global wealth management franchise,” said UBS chairman Kaspar Villiger on a media call after the announcement of Gruebel’s departure. “In the future, the investment bank will be less complex, carry less risk and use less capital to produce reliable returns and contribute more optimally to UBS’s overall objectives.” Francois Gouws and Yassine Bouhara, co-heads of global equities for UBS, also resigned in early October. And some sources expect UBS to further downsize investment banking.
Other sources suggest that the uncertainty facing investment banking is causing UBS to lose people who are not part of the targeted reduction, including many of its most talented investment bankers. However, sources closer to the situation are categorical that the exercise underway is “right-sizing the investment bank, which remains critical to the growth ambitions of the core wealth management business”.
Meanwhile, Swiss rival Credit Suisse is also in the middle of a restructuring. In July, while announcing second-quarter results, Credit Suisse said it would cut around 2,000 jobs, representing 4% of total headcount. Credit Suisse had around 50,700 people at the time, up from 50,100 at the end of 2010 and 47,600 at the end of 2009. Earlier this month, Credit Suisse said it would cut another 1,500 staff, representing a further 3% of headcount, across the course of next year. Like UBS, Credit Suisse will go back to around the number of people it had in 2009.
In Credit Suisse, as in UBS, the reductions are expected to focus on reducing staff strength in the investment bank as the bank’s stated strategy is “close alignment of the investment banking business portfolio with private banking and asset management businesses”.
Some sources said that the Swiss bank is significantly reducing its investment banking activities in some identified non-core emerging markets. But sources close to Credit Suisse refute this, citing statements from the annual report: “Across our businesses we will allocate resources to faster-growing and large markets, especially Brazil, Southeast Asia, Greater China and Russia. This is expected to increase revenues from these markets from 15% in 2010 to 25% by 2014.” Credit Suisse had no comment.