The double-edged exit of Andrea Orcel

The departure of Orcel may not spell the disaster that many have predicted for Bank of America Merrill Lynch – and it may not mark a long-term transformation in the fortunes of UBS either. My latest column for Financial News:

When Andrea Orcel turned his back on 20 years at Merrill Lynch last month to become co-chief executive of the investment bank at UBS – just days before Bank of America was set to make him president of its European business – the implications for both banks seemed stark.

His departure was almost universally heralded as a catastrophic loss for the US bank, leaving a huge hole at the top of its European business just as it was starting to rebuild its battered investment banking franchise. And for UBS, the surprise hire by group chief executive Sergio Ermotti – a colleague of Orcel’s for 16 years at Merrill Lynch – was trumpeted as a coup that sent a clear statement of intent to staff, clients and rivals: UBS is firmly committed to investment banking.

But now that some of the anger at BAML and the excitement at UBS have died down, it is becoming clear that the implications could turn out to be very different.

No one at BAML is pretending that Orcel’s departure is anything but a huge headache. But there’s a dawning realisation that, in the longer term, it could prove just the catalyst the bank needs to rebuild its investment banking business in Europe. Meanwhile, Orcel’s appointment at UBS may, in the words of one senior UBS banker last week, “dispel at a stroke whatever misconceptions were out there about our commitment to our clients and to investment banking”. But at what cost?


The potential “disaster scenario” for BAML is well rehearsed: the bank will surrender the recent gains it has made in European investment banking, with clients and bankers following Orcel out of the door to UBS. As recently as 2008, BAML was top in the European investment banking league tables, but it dropped to a humbling 11th place in 2010, before recovering to seventh in 2011 and maintained that position in the first quarter of this year.

Orcel’s departure leaves the bank looking for a president of Europe (to replace Jonathan Moulds) at the same time as a head of European investment banking (to replace Christian Meissner when he moves to New York to be sole global head of the business). Meissner, who has added the roles of interim president of Europe and emerging markets Asia to his day job as head of both global and European investment banking, is now – in the face of some stiff competition – unofficially the world’s busiest banker…

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