UBS Reforms Approach: Exiting Key Muni Investment Banking, Job Cuts Planned
- Posted on October 11, 2023
- Business
- By Arijit Dutta
- 322 Views
UBS Group AG is undergoing a significant transformation by withdrawing from its municipal bond underwriting business and planning substantial job cuts. This decision comes just a few years after the bank's vigorous efforts to revive its state and local government debt department by hiring dozens of bankers.

UBS Group AG is undergoing a significant transformation
by withdrawing from its municipal bond underwriting business and planning
substantial job cuts. This decision comes just a few years after the bank's
vigorous efforts to revive its state and local government debt department by
hiring dozens of bankers.
Ranked as the 20th largest underwriter this year, UBS is
set to shift its focus away from negotiated municipal bond sales. A
confidential memo, as reported by Bloomberg News, suggests a reorganization of
the public finance group and anticipates staff reductions as a result of this
strategic shift.
UBS Global Wealth Management executives Jason Chandler
and Patrick Grob stated in the memo that they would shift their business away
from the solicitation of negotiated new issues and instead pursue alternative
solutions to access the new issue market, as well as reposition their resources
to focus on where we see increasing client and advisor demand.
While confirming the memo's contents, a UBS spokesperson
declined to provide further comments. Negotiated deals, where borrowers hire an
investment bank before a transaction, account for approximately 80% of this
year's long-term municipal sales.
This move signifies a substantial retreat for UBS, which had revived its state and local government bond underwriting business in 2017 after exiting during the 2008 financial crisis. At that time, UBS embarked on a hiring spree to attract numerous bankers from competitors.
Also Read: England's Dawid Malan Shines Bright As A Star In The ICC T20I World Cup
However, the municipal finance landscape has proven
challenging this year, with a decline of 8% in municipal bond debt sales. This
has caused UBS's ranking among underwriters to slip four places. The bank's
ability to underwrite debt in the lucrative Texas fossil fuel industry market
was also curtailed due to the state's designation of UBS as a financial firm
that "boycotts" the fossil fuel industry.
UBS emphasized that municipals remain a core asset class
for their affluent clients. The bank is committed to offering competitive
solutions and products, which has led to a more than 100% increase in trading
volumes in the past year, with continued growth projected for 2023.
The decision to exit the municipal bond underwriting business and the subsequent job cuts highlight UBS's adaptability in response to evolving market conditions and client preferences.