UBS’s axe wielding could prove game changer

Abigail Hofman
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For some reason, the phrase “Denial is not a river in Egypt” resounds in my mind.

Since Lehman Brothers failed in October 2008, many senior investment bankers have turned their faces to the wall and refused to accept the new reality. Most of my contacts insisted that the industry was not in secular decline. “It’s a bad phase,” they murmured. “Things will improve next year.”

Few of the bulge-bracket players would countenance the notion that their businesses were substantially overstaffed, that costs were out of control and that the soft-touch regulatory environment had gone forever. I was stunned by the arrogance, greed and, let’s be frank, stupidity of the industry.

Then there was a public backlash against big bonuses. So what did the investment...