UBS job losses persist in Connecticut
STAMFORD — A banking giant’s three-key logo still hangs on top of a downtown office tower. But the number of people working under that sign keeps dwindling.
Three years after UBS moved its already-downsized local contingent from the sprawling complex that it once filled at 677 Washington Blvd., to smaller space at 600 Washington Blvd., new state data show that the firm’s headcount dropped again in 2018. The retrenchment reflects the upheaval it has faced in the past decade, as it reckons with a reordered finance-services industry. But with a $20 million state loan supporting its Connecticut operations, the Swiss company does not appear to be on the verge of leaving the state.
“What we’re seeing in Connecticut is the continued process of UBS pulling back on its ambitions of having a large footprint in the United States,” said Lawrence J. White, a professor of economics at New York University. “I think they’re going to continue to want to have a presence in the U.S.; for a large international bank, they can’t not be in the United States.”
UBS officials declined to comment for this article.
Last year, UBS employed about 1,260 in the state, down 5 percent from the 2017 average, according to the state Department of Economic and Community Development. Most of them are based at 600 Washington.
In the past four years, UBS’ statewide headcount has declined about 40 percent. In 2014, it employed about 2,160 in Connecticut.
Even the 2014 total represented a fraction of its peak presence. The Stamford contingent had reached 4,400 before the financial crisis, according to some counts.
The shrinking workforce led to the bank’s 2016 move from 677 Washington to 600 Washington. The latter property also houses the Americas headquarters of Royal Bank of Scotland.
For nearly 20 years, UBS occupied 677 Washington’s approximately 700,000-square-foot complex, which was built in the mid 1990s. Its employees filled a 13-story tower and a seven-story pavilion that would become the world’s largest trading floor.
But the juggernaut sputtered in the wake of the 2008 financial crisis. For 2008, UBS reported a loss of nearly $20 billion, the largest ever by a Swiss corporation.
Among the controversies, a rogue trader in London was convicted in 2012 for losing the firm more than $2 billion. In 2013, UBS paid $885 million to settle allegations from U.S. regulators that it violated state and federal laws when it sold mortgage-backed securities during the housing bubble.
The scandals, combined with other factors such as more stringent trading regulations, sparked companywide restructuring that led to the shrinking of the Connecticut operations.
“I think the 2008 crisis and the following five to eight years have been a chastening experience for them,” White said.
RBS’ own struggles created the available space at 600 Washington.
It laid off more than 700 Stamford-based employees between 2015 and 2018, as it grappled with years of losses after the financial meltdown. It finally turned a profit, in 2017, and finished in the black again last year.
Since June 2018, RBS has not reported any mass layoffs to the state’s labor department.
Last year, RBS announced that it would sell the building at 600 Washington, but that it would remain there as a tenant. It now employs about 500 in Stamford.
In 2011, UBS secured the $20 million state loan, a deal that reflected the faith of then-Gov. Dannel P. Malloy’s administration in large aid packages to help persuade big companies to grow in Connecticut.
The deal was renewed in 2014 — that time with more oversight.
Between 2012 and 2018, the company earned $11.4 million in loan forgiveness and repaid $3.6 million, numbers that were based on state-set job targets.
For the state to forgive all of the remaining $5 million on the loan, UBS would need to average more than 1,750 employees in 2019, 2020 and 2021.
Despite the declining headcount, officials in Malloy’s administration defended the deal.
“We were looking at a situation where they could have completely exited the state,” Catherine Smith, the state’s then-economic development commissioner, said in a 2017 interview. “They may not have the full 2,000 here, but they still have hundreds of employees here. I think the incentives have done what we expected them to do.”
Many state legislators have looked at the agreement more warily.
UBS’ “employment numbers have dropped significantly, which is why we need to ensure we are holding DECD’s investments in businesses much more accountable and more closely scrutinizing their return on investment,” said state Rep. Caroline Simmons, D-Stamford, who is co-chairwoman of the state legislature’s Commerce Committee.
In the past couple of years, UBS’ outlook has improved.
It recorded a 2018 net profit of about $4.9 billion, compared with a 2017 total of $969 million. The 2017 number reflected charges tied to the U.S. tax reform passed the same year.
Still, a reversal of the declining Connecticut presence appears unlikely.
“I would feel reluctant to say that they will definitely stay in Stamford,” White said. “But there is an incumbency advantage to being here and operating in this ‘ecosystem’ with hedge funds and other finance firms.”
The company also maintains major U.S. offices in Manhattan and Chicago. Its head offices are in the Swiss cities of Basel and Zurich.
Wealth management for families and individuals, personal and corporate banking, asset management and investment banking comprise its principal businesses.
In Stamford, UBS and RBS have been eclipsed in recent years by a number of media, biotech and IT companies whose local headcounts are surging.
WWE plans to relocate its headquarters by early 2021, from the city’s East Side to 677 Washington. It would take 415,000 square feet there and convert UBS’ former trading-floor space in the pavilion into a production hub.
Professional-services firm KPMG plans to relocate its Stamford offices to 677 Washington later this year, with plans to add more than 100 Stamford jobs in the next few years.
Before the WWE and KPMG deals, the property had languished as the city’s largest office vacancy, following UBS’ move to 600 Washington.
Down the street, cable-and-internet giant Charter Communications is building a new headquarters at 406 Washington Blvd., to replace its current downtown offices, at 400 Atlantic St.
“The growth of companies like WWE and Charter is extraordinary,” said Joe McGee, vice president of public policy for The Business Council of Fairfield County. “Finance is still going to be a base for the economy in Stamford, but it’s important that we also build other bases.”
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