The fallout from this summer’s mortgage meltdown continued to wreak havoc inside Wall Street’s corner offices with UBS showing two senior bond executives the door just a week after taking a $3.42 billion write-down.
UBS fired David Martin, its head of interest-rate trading – which includes the bank’s high-profile mortgage and asset-backed trading operations – after the firm posted a quarterly loss due to its massive exposure to several collapsed areas of the bond market.
The firm also fired James Stehli, the head of its collateralized debt obligation unit. CDOs, which are bonds made from other bonds, have been devastated in price in the wake of ratings downgrades and the collapse of secondary trading.
The departure of Martin and Stehli comes a week after Merrill Lynch shook up its management ranks, ousting Osman Semerci, 39, the head of fixed income, and broke ties with Dow Kim, 44, who formerly co-headed trading and investment banking and was about to launch a hedge fund backed by Merrill. Those plans were shelved.
Earlier in the year, UBS unceremoniously dumped its president, Peter Wuffli, as it coped with the collapse of Dillon Read Capital Management, an internal $3 billion hedge fund that choked on a series of disastrous subprime mortgage trades.
The positions that UBS’ fixed-income division inherited from the hedge fund were a source of some of the firm’s most recent write-down.
Last week, UBS Investment Bank Chief Executive Huw Jenkins and CFO Clive Standish agreed to step down in the wake of the bank’s first quarterly loss since 1998.
UBS disclosed that it currently holds about $19 billion worth of subprime mortgage-backed securities.
A UBS spokeswoman confirmed the departures but declined further comment.