Sideways: Why does ‘Killer’ Karofsky get second billing in UBS’s The Odd Couple?


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Jon Macaskill profiles the two new co-heads of investment banking at UBS.



When UBS had to replace its investment bank head Andrea Orcel, who is leaving to become CEO of Santander, it came up with a convenient internal solution to the succession problem.

UBS group CEO Sergio Ermotti may nevertheless have set the scene for future conflict with his decision to give top billing to Piero Novelli in the announcement that the veteran M&A adviser will co-head the investment bank alongside equities chief Rob Karofsky.

Alphabetical order by surname would dictate that Karofsky got the first mention, but the UBS announcement instead gave prominence to Novelli and led with the news that he will focus on the corporate client solutions business line, while Karofsky will supervise the investor client services unit.

Revenue generation is another factor that should point to a lead role for Karofsky in the UBS remake of the Odd Couple at the top of its investment bank.

In the first half of this year, Karofsky’s securities business generated SFr3 billion of revenue, more than twice the SFr1.45 billion from Novelli’s advisory and capital markets unit.

Recent revenue growth dynamics would also indicate top billing for Karofsky. Investor client services saw a 19% increase in second-quarter revenue, compared with the same period in 2017; while corporate client solutions revenue fell by 15%.

Stark disparity

And the personal specialties of the two new co-heads had a stark disparity in revenue. Advisory earnings in the first half of this year were just SFr352 million, while the equities group run by Karofsky produced SFr2.15 billion.

Novelli’s advisory fiefdom isn’t even the biggest revenue generator within the corporate client business, as both equity capital markets and debt capital markets earned more money in the first half of 2018.

Karofsky, by contrast, is the undisputed top dog in sales and trading, in the wake of a decision by UBS to slim down its presence in fixed income. Revenue in his equity group in the first half of this year was more than double the SFr902 million contributed by FX, rates and credit combined.

So why did UBS give top billing to Novelli?

He is older than Karofsky, though he has also been around so long that his most recent title before the current promotion was executive chairman of the corporate client group.

Executive chairman is only a step away from the title of vice-chairman that is often used within banking to signal that a senior employee is being gradually moved towards the exit, but Novelli’s promotion is a reminder to all professionals of a certain age to stick around just in case something crops up.


Andrea Orcel

Perhaps Ermotti felt there might be a dearth of sharp-suited Italians on the executive board, now that Orcel has taken his keen interest in tailoring to Santander.

Novelli is certainly from the side of investment banking that finds time to attend to sartorial details.

Karofsky, by contrast, is a New York trader through and through. He earned the nickname ‘Killer’ Karofsky when he was an equity derivatives dealer at Morgan Stanley, back in the days when suits on Wall Street were boxy and were judged by their ability to bounce back from being hurled to the dealing room floor in a rage.

Karosfky may have reason to feel aggrieved about Ermotti’s apparent partiality to Novelli, or worried that an unwelcome brush with New York tabloid infamy years ago is counting against him.

But life isn’t always fair – if it was, Orcel might have been forced to help clean up the mess at failed banks RBS and Fortis after the biggest deal of his advisory career, rather than being rewarded years later with a job running Santander, the only winner from the disastrous three-way takeover of ABN Amro in 2007.

And who knows? The Piero and Rob show (in uncontroversial alphabetical order by first name) might just turn out to be one of those unlikely pairings that works out – such as Felix and Oscar in The Odd Couple.