UBS effectively cut out a layer of management at its investment bank, but those jobs have yet to go. finews.asia on what the bank is waiting for.

Last September, Piero Novelli and Rob Karofsky took over at the Swiss firm's investment bank. The two streamlined the unit last month, disbanding a regional structure in favor of a more global approach.

The world's largest wealth manager, which competes selectively in investment banking after retreating from large parts of debt-trading several years ago, is predicting that capital markets will remain difficult, a senior UBS banker told finews.asia.

Dour Prospects

A drop in the European fee pool of roughly 35 percent represents a sharper movement than mere fluctuation, the person said. UBS will also cut jobs as a result of the revamp, but waited out the third quarter, which ended on Monday, to do so, a second person familiar with the bank's planning noted.

The unit has added 376 people since the duo took over from Andrea Orcel last year. Even before the September revamp, media reported that Novelli and Karofsky will slash hundreds of jobs in order to improve profitability.

Pressure on CEO

So what's stopping them? UBS' reluctance to detail the cuts sooner is tied to the pressure on boss Sergio Ermotti. The bank opted to refrain from measures which would hit third-quarter results – in part to take the heat off the CEO, a source told finews.asia.

Specifically, the cuts are likely to take out senior bankers who are better paid: their dismissal costs UBS considerably more than that of junior staff. UBS wanted to kitchen-sink these costs in the fourth quarter, the person said.

New Unit Designed

The move comes as Novelli launches a new unit designed to better tap wealthy entrepreneurs. The idea is rooted in what UBS views as the dual challenge of managing clients' personal funds while affording them access to capital to build their companies.