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The name game There's been a whole lot of name-changing going on to create Warburg Dillon Read, a U.S.-based investment bank whose parent, Swiss banking giant UBS, hopes will soon be challenging the Goldmans and Merrills of the world for I-banking primacy. Established in 1832, Wall Street investment bank Dillon Read was thrown into the churning mix of global financial services merging in September 1997, when it was acquired by SBC Warburg, and was renamed SBC Warburg Dillon Read. SBC Warburg had been created by the 1995 purchase of London investment bank S.G. Warburg Group by Swiss Bank Corporation, one of Switzerland's largest banks. When Swiss Bank merged with rival giant Union Bank of Switzerland in 1998 to form UBS, the two firms merged their I-banking businesses under the name Warburg Dillon Read. The name-changing might not be over yet. UBS is reviewing the name of its I-banking arm for branding purposes. (WDR is the only major business line that does not carry the UBS prefix.) Rocky road As with virtually any merger, what was pitched as a merger-of-equals did not turn out that way. The firm's initial head, Hans Grier, came from SBC Warburg Dillon Read, as did the heads of equities, foreign exchange and corporate finance. (Corporate finance is headed by former Dillon Read chief Fritz Hobbs; Grier has since left.) Between the time the merger was announced in January and completed in June, many of UBS' top bankers left, mostly to competitor Donaldson, Lufkin & Jenrette. Also, UBS had to confront the highly-publicized suit brought against it and other Swiss Banks by relatives of Holocaust victims, agreeing to pay out two-thirds of the $1.25 billion settlement (Credit Suisse Group is paying the other third). And in September, UBS announced that it had lost $780 million in the blow-up of hedge fund Long-Term Capital. UBS? chairman, Mathis Cabiallavetta, abruptly resigned. Hope springs eternal Amid UBS' problems, as top bank officials met to mull over its strategy concerning high-risk businesses like investment banking, rumors about the possible divestiture of Warburg Dillon Read began hitting the Street. Still, most analysts do not believe that UBS will abandon investment banking altogether. One of Warburg Dillon Read's joint-COOs, David Solo, has, in fact, been promoted to oversee UBS' risk management. Despite its recent problems, Warburg Dillon Read hopes to become one of the world's premiere I-banks. It is already the leader in Europe, and is among the top three in Asia and Latin America. The firm hopes that it's only a matter of time until it seriously challenges the big Wall Street boys on their home turf. Shelling out the big bucks Warburg Dillon Read is using its parent's deep pockets to try to become a force in U.S. investment banking. In March 1999, the firm reportedly shelled out $70 million to lure Benjamin Lorello, a Salomon Smith Barney health care banker, to the firm. With Lorello, 38 banking professionals came from Salomon. The firm reports that in one two-week period since their hiring, they generated close to $45 million in fees. Despite splashy moves such as these, the UBS' commitment to investment banking continues to be questioned. In the beginning of 1999, the giant Swiss bank made a statement at a shareholders' meeting that Warburg Dillon Read would play a "key role" in its European strategy. That statement was made partly in response to rumors that UBS was looking to sell WDR. (UBS does say that it will maintain tighter risk controls on its I-banking arm in the wake of the collapse of Long-Term Capital Management in fall 1998.) And when WDR's former chairman and CEO Hans de Gier resigned in March 1999, industry observors suggested that de Gier left because he was unhappy about UBS' lack of commitment to an aggressive I-banking strategy.
UBS Warburg posts recruiting schedules on its web site at www.ubswarburg.com. The firm has recently instituted a snazzy online application procedure that is required for all candidates outside of the U.S. and Switzerland. Those seeking employment with the firm should be happy to know that the firm is growing aggressively. "Every year it's the largest class ever, for the last couple of years at least," says one insider. "They're expanding the number of schools, and they put a lot of effort into it." Associates at UBS Warburg have in the past warned in that a business degree doesn't carry the same weight at UBS Warburg as it does at most American banks, especially in sales and trading. However, the firm is taking steps to emphasize the MBA. For example, the firm has changed its training program to separate undergrads from MBAs in corporate finance (they took the same training program previously), and to initiate undergrads in S&T with a three-week 'core training' program before joining the MBAs for training (rather than have undergrads and MBAs go through the exact same program, as they had in the past). On the other side of the coin, insiders note, the firm provides greater opportunity for undergrads. Says one contact: "For undergrads in the analyst position, it's a fantastic place. If you're a Wharton undergrad, it's really ideal. They really love that profile, the really hungry young person." Says one corporate finance analyst, "I worked on a divestiture where I did all the plant tours in addition to the management presentation. On the other side, the most junior person I saw was an associate. That's the opportunity. On the other hand, if you're looking for structure, it's probably not the best place for you."
Merger bumps? Depends who you are For UBS Warburg in the U.S., all sales and trading and operations employees are housed in Stamford, Connecticut, while corporate finance and research works in offces on Park Avenue in Midtown Manahattan. How the merger between SBC Warburg Dillon Read and UBS in 1998 affected the firm depended to a large extent on the location: the firm's sales and trading force saw considerably more turmoil than their I-banking colleagues. For example, there was a brief flurry of policy changes instituted by UBS (as one contact put it, "No more jeans, no more sneakers, no more this and that") that were "beaten back down." "Up until the merger with UBS, the SBC part was like a lot of mini-firms, strong together with a huge balance sheet," explains one insider. That contact explains with a history lesson of the former Swiss Bank's foray into trading: "Swiss Bank first entered into I-banking through the acquisition of a Chicago-based proprietary fund run by a bunch of whiz kids." This partnership, with a firm called O'Connor, took place in the early 1990s. "It was a classic case of a reverse takeover. O'Connor immediately took over and ran everything. They instituted a casual policy, so everybody was wearing jeans." That sort of loose, flexible culture, insiders say, continued in America on the trading floor throughout Swiss Bank's acquisitions of Warburg and Dillon Read, and eventually, through the merger with UBS, despite some initial turmoil. In corporate finance and in London, it's something of a different story: "It's basically a lot of old Warburg people running the show," says one contact in London. "It's very much of a UK British culture, it's a bit stodgy." Says a corporate finance insider in New York: "We don't get casual Fridays, it's pretty old-line." Also, contacts in New York being not as affected by the merger with UBS as those in Stamford. "We definitely added some people in some areas, like some good research analysts, but culturally I didn't think that it was that much different," reports one corporate finance insider. "There's maybe more of a London presence, it's the small things like you'll get e-mails every day from overseas, and they'll use British spelling and British language." Says another insider, "Coming from Dillon Read to Swiss Bank and then UBS, and being absorbed into a larger organization, there's more Swiss-like forms - it's just a little more bureaucratic, but I think the mergers have gone pretty well." As for the actual offices, Stamford, Connecticut, the American headquarters and site of sales and trading, is a New York suburb in wealthy Lower Fairfield County. Reports one insider in Stamford: "The younger people tend to all live in New York. People with families tend to live in Connecticut - for them, it's an ideal situation. Anyone who doesn't live in Connecticut better think twice [about joining WDR]. It just adds on almost three hours to an already long day." A bit more laid-back, and hungry "It's hard to make blanket statements for hundreds of people, but overall, in a relative sense, I think this has a looser culture than other investment banks," reports one insider about UBS Warburg. However, warns that insider, "It's still investment banking, so it's still bureaucratic." This judgment is backed up by other insiders. Says a contact in Asia: "I would describe the culture at UBS Warburg as a relatively loose compared to the U.S. banks." Insiders also appreciate the current aggression the firm is displaying in I-banking, as it means more opportunity personally. "I think that generally, people sense there's a lot more opportunity as far as upward mobility is concerned when compared to other firms," reports one insider, "because we're trying to grow fast." Of course, part of the drive to grow fast means eye-popping salaries to lure lateral bankers, but this doesn't mean UBS Warburg is above the curve at all levels. "If you look at what the average ranges are like, I would say that we are basically smack dab in the middle," reports one insider. "Obviously they hired the whole health care group from Salomon for a lot of money, but I think it's smack dab in the middle."
Robert Zeltner Human Resources UBS Warburg1 677 Washington Boulevard Stamford CT 06912 (212) 821-1000 (203) 719-4945
Bear Stearns;Credit Suisse First Boston;Deutsche Banc Alex. Brown;Donaldson, Lufkin & Jenrette;Goldman Sachs;J.P. Morgan;Lehman Brothers;Merrill Lynch;Morgan Stanley Dean Witter;Salomon Smith Barney More Company Profiles For more career information, go to Vault.com ©2000, Vault.com Inc
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