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Bonds News

UBS ousts credit executives after big losses

LONDON, Oct 11 (Reuters) - UBS AG UBSN.VX, where market turmoil this summer led to $3.4 billion of credit losses, pushed out two fixed-income executives in the latest sign that the bloodletting at the big, beleaguered bank is far from over.

David Martin, global head of interest rate products, leaves after a 16 year career at the bank, according to an internal memo from the bank’s newly appointed global fixed-income head, Andres Esteves.

Martin’s department included mortgage and asset-backed trading operations that suffered from the broad fallout of the U.S. subprime mortgage meltdown this year.

Also out the door is James Stehli, who ran the bank’s collateralized debt obligation business. CDOs are securities comprised of other bonds, and which have been hammered by their exposure to risky mortgages.

UBS spokeswoman Rohini Pragasam confirmed the memo but declined further comment.

Esteves announced a number of other internal moves as the bank grapples with trading woes that have dragged down results and generated embarrassing losses this year.

Ramesh Singh takes over UBS’s mortgage and asset-backed securities groups, which will be combined with the bank’s securitized products team to create a new group -- real estate and securitization.

UBS is also making Sascha Prinz and David Sacco heads of government bonds and flow derivatives.

Esteves, who replaced Simon Bunce in a shake-up earlier this month, indicated there would be more changes ahead.

“The structure of the group will solidify over time as we complete our evaluation of the current (fixed income, currencies and commodities) model,” Esteves said.

The staid Swiss banking and wealth-management giant has been a stormy place this year, suffering a series of losses in fixed-income trading. It reported a third-quarter loss driven by big and errant bets on residential mortgage securities, CDOs and structured products.

Overall, UBS took $3.4 billion in write downs. Earlier this year, UBS was forced to shut down Dillon Read Capital Management, a hedge fund that suffered losses on subprime mortgages. DRCM’s trading book was transferred to UBS investment bank.

UBS, which replaced Chief Executive Peter Wuffli with Marcel Rohner earlier this year, 10 days ago said investment bank CEO Huw Jenkinswas stepping down and Chief Financial Officer Clive Standish was retiring. It also announced 1,500 job cuts in the capital markets and investment banking business. Other Wall Street banks have also suffered big credit losses and set layoffs. Merrill Lynch MER.N, which reports its third-quarter results next month, pushed out its head of fixed income and cut ties with former investment bank co-head Dow Kim.

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