It was bound to happen. UBS is the first firm to stand up and be counted in the brave new world post-subprime. From this year-end, UBS is to limit the amount of cash paid out as part of staff annual bonuses. Previously unlimited, from now on bankers will have to get used to a cash cap of $750,000. The rest of year-end bonuses will be paid in stock.
The New York Post reports that as Citi CEO Chuck Prince and Merrill Lynch boss Stan O'Neal got their marching orders for what happened on their watch in the third-quarter, Goldman Sachs CEO Lloyd Blankfein looks on target to bag a bonus of some $75m at year-end - around $20m more than he got for 2006.
The Wall Street Journal reports that Citi CEO Chuck Prince first learned that his company would face further asset write-downs a couple of weeks back, when new CFO Gary Crittenden called him up on his cell and indicated that there was trouble. At that moment Prince probably knew that the jig was up, and that his 28-year career at Citigroup was all but over.
Reuters reports that Bank of New York Mellon confirmed Friday that US regulator The Securities and Exchange Commission has completed three probes into the company activities (including possible market timing), and decided that no further action is required.
There appears to be a fight for decent candidates as both Citi and Merrill Lynch try and fill their CEO slots, following the recent departures of Chuck Prince and Stan O'Neal. Many of those on the so-called firm shortlists are the same candidates. We look at those candidates and the odds we think they have of bagging the jobs.
We have a few decent highly-placed financial markets professionals who send in their insight into the market from time to time. Here's an uncompromising view sent in by one of our favourite commentators:
Reuters reports that HSBC is cutting 120 investment banking jobs as it is to stop selling and trading mortgage-backed securities. 100 jobs will go in the US due to the closure of the mortgage-backed desk there, with the other losses coming in London. The firm is also to cease research coverage of the US healthcare sector.
It's got to be bad out there when Morgan Stanley discloses that it's mortgage traders lost $3.7bn on a complicated subprime related trade (which could result in further losses), and the market breathes a huge sigh of relief.
The pressure is really on at Citi, with calls growing daily for the company to be broken up in the name of shareholder value. Some feel that chairman Robert Rubin shouldn't be on the look-out for one CEO, but several - folks who can run various parts of the empire and stay with their units post break-up. And, in the meantime, several rival firms are thought to be interested in acquirin Citi assets.
We reported earlier this week that Deutsche Bank has a bit of a rat problem on the equities floor at its main London Wall building. We also alluded to the fact that, a few years back, UBS had a mice issue at 100 Liverpool St. Well, it seems that the UBS mice are alive and kicking, as the bank still has vermin on the premises.