Jerker Johannson has a mountain to climb.
The former Morgan Stanley executive begins his job as head of UBS’s investment bank just as it declares its first loss in ten years and gives warning that the next 12 months will be as tough as the last.
It’s not that UBS, one of Europe’s biggest financial players, has sat on its hands. Mr Johannson’s predecessor, Huw Jenkins, was not the only executive swept away by the credit crunch tidal wave.
Peter Wuffli, the former group chief executive, went. John Costas, responsible for setting up the eventually disastrous Dillon Read hedge fund, was sidelined. Chairman Marcel Ospel came under fierce pressure but stayed.
UBS has taken the financial pain of the sub-prime mortgage nightmare as well.
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Today’s $13.7 billion (£7 billion) writedown follows $4.3 billion already taken and brings the grand total to $18 billion.
Risk controls have also been tightened. Plus, an additional overhaul of its funding measures means that all of the bank’s illiquid holdings now have to be backed by long-term assets.
The hurdle for Mr Johannson is less to do with UBS’s financials, although with predictions that total writedowns may reach about $400 billion, the issue has hardly gone away.
The issue is more one of confidence and morale.
Marcel Rohner, Mr Wuffli’s replacement, has already eliminated 1,000 staff.
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An increase in staffing costs over the full year — despite lower bonus payments all round — will cause a worry or two at UBS’s Liverpool Street offices in London that more cuts might be on the cards.
Those bankers that remained were paid lower bonuses last year. A flight to the exit for higher rewards would not be good for UBS right now.
At least equities and investment banking — where some first-rate corporate finance advice is on offer — turned in record revenues, we are told.
Perhaps it is good news for Mr Johannson, who may now be able to look beyond the next three months for the chance to prove himself.