How much was Kweku Adoboli actually earning at UBS? And will persons from the middle office ever move into the front office again?
As details emerge of Kweku Adoboli's 'bling' accomodation with "limestone floors and whitewashed walls,", that was "big enough to make a 10-bedroom flat" and comparable to an, "art gallery," costing an alleged 1k a week, the question is very clearly: how much he was earning at UBS? And then, are all Delta One professionals doing as well as he was?
The answer to the first question appears to be that: Kweku Adoboli was probably earning several hundred k sterling. And the answer to the second appears to be that: other Delta One professionals probably earn more than him because they haven't spent their entire career at one firm and worked their way out of the middle office.
"If he joined in 2006 and moved into the front office around 2007-8 and was a director, he was probably on a base salary of around 120k and would have been generating revenues of around 5m, which should have given him a bonus of up to 250k," speculates one Delta One headhunter. "However, he may have made less than that as he moved internally and would have been happy to get out of the middle office," he adds.
Big Delta one hiring this year
There's been a lot of movement in Delta One this year, including the exit of CJ Donley, the former head of Delta One sales in Europe at UBS who apparently left the bank in August and has yet to resurface (There is no suggestion that Donley's exit was in any way related to Adoboli's alleged loss at UBS).
Delta One headhunters also point to recent departure of Dan Katz and Ronnie Feiereisen, the former co-heads of Delta 1 sales at Nomura, to BAML and JPMorgan respectively. James Palmer, head of Delta One sales at Credit Suisse, is also thought to have resigned several weeks ago, but his whereabouts is currently unknown.
"There are some very senior guys in Delta One who've migrated across from flow derivative sales desks," says a search consultant focused on the business. "In the first half of this year, people were moving on very big numbers."
Lots of migration from the middle office
Much has been made of the fact that like Jerome Kerviel, Kweku Adoboli migrated out of the middle office. Another Delta One headhunter says this isn't at all unusual in this space.
"A lot of Delta one people went in as graduates in the middle office and in the Delta one explosion over the past couple of years they've risen with the bullet," he says. "As a middle office professional in the space since 2006, Adoboli would have had intimate knowledge of the risk management systems for the Delta One desk," he adds.
Robert Peston is reporting today that Adoboli informed UBS himself of his alleged mishap himself, suggesting the bank was completely oblivious of it until that time.
There is much speculation as to how on earth Adoboli could have lost so much money, of which some of the most plausible is to be found here.
Either way, it's suggested that Adobili knew his way around UBS's risk systems. "I can't see a way to lose that much money in the last 30 days without having a position over $10B, which was (before today) about 20% of the banks market cap," says one commentator. "I can't see how the treasury wouldn't have freaked out on settlement day."
Conclusion: moves out of the middle office have always been hard. It looks like they're about to get harder still.
