Chief Executive Officer Oswald Gruebel, who joined UBS in February 2009, is relying on a recovery in fixed-income trading to help the bank reach an annual pretax profit of 15 billion francs in the next three to five years. The debt unit, headed by Rajeev Misra and Dimitri Psyllidis since January, reaped about $2.3 billion of revenue in the quarter, people familiar with the matter said on March 29.
Please recall that "You and BS" created an internal hedge fund called Dillon Read that blew up about three years ago because it's investment bankers didn't have a clue what they were doing. Everybody seems to be getting excited about the latest iteration of the Eurozone's Greek rescue plan, thinking this will stabilize the debt markets and make trading revenue more predictable. They're ignoring the inconvenient details: The rescue plan has so many caveats that getting unanimous agreement is probably a bridge too far. Thanks to Karl Denninger's Market Ticker for finding that very important article.
Investment bank EVPs are overruling their risk managers once again. Riding a tiger can be exciting until you try to get off. The big cat may then decide to eat you.
Nota bene: Anthony J. Alfidi has no position in UBS at the time this article was published.
