Top UBS Banker Orcel Says He Has `Very Aggressive Plan for U.S.'

(Bloomberg) -- UBS Group AG’s Andrea Orcel is doubling down on a pledge to ramp up the Swiss bank’s presence in Wall Street dealmaking, vowing to recruit marquee bankers.

Orcel, president of the firm’s investment bank, said in an interview that he’s pursuing “a very aggressive plan for the U.S.” -- a region where the firm has sought to hire in recent years while struggling to win more market share handling mergers and acquisitions. The current strategy isn’t to make the business bulkier so much as to assemble leading teams for specific sectors, such as retail, software and aerospace, he said.

Top UBS Banker Orcel Says He Has `Very Aggressive Plan for U.S.'

Within three to five years, UBS aims to double the number of client-facing senior-level bankers in the Americas, a person briefed on the strategy said, asking not to be identified because the target isn’t public.

“You have Ferrari and you have Fiat,” Orcel, 54, said at UBS’s main Manhattan offices. “Fiat is like the bulge-bracket banks that are active on all the business segments, and they go for volume. UBS is like Ferrari: We are much smaller and focused.”

The remarks are notable because they’re Orcel’s first on the future of the U.S. business since Americas investment banking chief Joe Reece departed in March, only a year after joining. Reece left amid disagreements with Orcel over strategy, people familiar with the discussions said. The bank named Sam Kendall as an interim replacement.

Read more: UBS banking executive Reece is said to exit one year after hire

UBS ranked 12th among advisers on mergers and acquisitions in the Americas in 2015 before Orcel announced early the next year that the U.S. would be his division’s top priority for growth. It hasn’t yet climbed higher on league tables, according to data compiled by Bloomberg. Still, Orcel says its profitability and prowess in certain businesses has improved. In a memo last month, he said he remains committed to building out the unit and that an overhaul he began in 2012 “has proved to be a success.”

Orcel loves a good Ferrari metaphor, rolling it out (here and here) to make a variety of points about making his division more nimble than it was before the financial crisis. Chief Executive Officer Sergio Ermotti has spent much of his tenure refocusing the bank on wealth management, leaving Orcel, a fellow Merrill Lynch alum, to shrink businesses including fixed-income trading. Orcel’s division now generates most of its income from equities, dealmaking and underwriting. In 2015, his operations helped the supercar maker Ferrari SpA sell shares to the public.

Job Cuts

To boost profitability, Orcel cut thousands of jobs in the investment bank’s global operations, reducing its annual wage bill by about a quarter over five years to roughly $3 billion. He said the unit’s return on attributed equity has been 24 percent on average since the revamp.

The goal of M&A hiring, he said, won’t be to emulate a giant commercial bank that offers loans to lure clients, and then pitches them suites of financial products. Instead, he wants to build out an old-school investment bank that wins business by providing superior advice and service, while commanding the fees that deserves.

“We need old-fashioned bankers, who have relationships, have ideas, execute better than others -- and clients therefore trust them,” Orcel said. “We have a very high bar on the quality of people we hire.”

Seeing Progress

The firm already has had some success with its focus on the Americas, the world’s largest market for dealmaking. The Zurich-based bank’s fees from handling deals in the region climbed almost 30 percent last year, Orcel said.

He attributed some of that to activism mandates, in which UBS defends clients against corporate raiders or sometimes helps shareholders agitate for change. Last year, the firm hired Lloyd Sprung, a former Evercore Inc. and Merrill Lynch banker, to oversee restructuring, another growth area. The company has also been focusing on initial public offerings and helping private equity firms with leveraged buyouts.

To be sure, the region is especially competitive. Global advisers such as Goldman Sachs Group Inc. and Morgan Stanley are based there, as are boutiques opened by marquee dealmakers. Ironically, some UBS defectors have proven particularly formidable.

Last year, the firm ranked 13th globally among M&A advisers behind Centerview Partners, a boutique firm co-founded by a 19-year UBS veteran, and Rothschild & Co., where the North American operation is run by a UBS alum. In North American airlines deals it ranked No. 4. But in retail and software deals, other areas where Orcel is looking to expand, it was No. 11.

“While we may appear to not be in the top tier of every league table, we are leaders in the areas where we choose to focus,” Orcel said.

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