UBS Warburg has merged its plain-vanilla and structured credit derivatives business and is thought to be creating one distribution group for all fixed income and credit products, said officials familiar with the plans. Sal Naro, global head of plain vanilla credit derivatives trading, and Mike Connor, global head of structured credit derivatives, will become co-heads of the combined entity. Former UBS staffers and headhunters said co-heads tend to have a short life expectancy in the Hobbesian environment of investment banking and predict that Naro will emerge as sole head of the group. Connor declined comment and Naro was travelling and could not be reached. Spokespersons at the firm did not return calls.
The move follows a reorganization of senior management in December, which saw the two groups put under the remit of Robert Wolf, global head of fixed income in Stamford, Conn.
In a previous reorg, Naro became global head of plain vanilla credit derivatives in March when his co-head, Hugh Evans, left the firm (DW, 3/4). Two former traders put their money on Naro becoming sole head of the new group. He is one of the most widely respected players in the credit markets, having forged his reputation as a bond trader at Bear Stearns. In addition, they note that Naro has a strong backer at UBS in the form of Wolf, who persuaded Naro to come out of retirement to join UBS. Conversely, Connor may have lost his sponsor as he now reports to Wolf rather than his previous boss Tim Fredrickson, head of interest rates. Another credit head countered that, "Connor's good at the hard stuff, it's easier for him to learn the trading than Sal to learn the structuring."
UBS watchers said the new structure makes sense because the bailiwick of the two desks overlapped. A former staffer said the firm has been attempting to do this since the merger with Swiss Bank Corp., but was unable to do so before because the desks came under different groups.
