Morning Coffee: Citi announces job cuts days before bonuses. Sergio Ermotti wants out at UBS

If you have a keen memory for news involving Citi, you could deploy it to remember that before Christmas we said that Citi would be cutting jobs in the New Year. This is now happening, albeit at a small scale. 

Get Morning Coffee ☕ in your inbox. Sign up here.

Bloomberg reports that Citi is planning 1,000 job cuts this week, less than 1% of its 227,000 employees. The bank is saying that: "These changes reflect adjustments we’re making to ensure our staffing levels, locations and expertise align with current business needs; efficiencies we have gained through technology; and progress against our transformation work.”

While this suggests that the cuts might be about Citi's enthusiasm for AI agents or offshoring, our pre-Christmas sources said the bank's post-Christmas cuts would be more about eliminating underperforming managing directors and saving money on their bonuses. 

Given that Citi is expected to announce bonuses on Thursday this week, the cuts do indeed seem timed to swap severance packages for performance pay. Citi insiders who fell foul of the bank's notorious forced ranking system during annual reviews tell us they're apprehensive about what comes next. "I've never been ranked this low before," says one. "I think they're planning to push me out." 

Separately, after being persuaded back from the beach by Colm Kelleher to run the combined UBS and Credit Suisse in 2023, Sergio Ermotti will soon return to whence he came. 

The Financial Times reports that Ermotti plans to step down as CEO of UBS for a second time in April 2027 and that Colm Kelleher is looking for his replacement. 

This should come as no surprise. When Kelleher persuaded Ermotti to come back, Ermotti always said he wouldn't stay forever. “There is a lot of life in him, but he is not as young as some people,” observed Kelleher keenly at the time. 

Ermotti, who is 65, does not need the money. When he first retired from UBS in 2020, he said he no longer needed to work for cash and was following his passion and holidaying in the Maldives. Last year alone, he earned another $17m.

UBS has long said it would like an internal successor to occupy Ermotti's seat and was said by the FT in 2024 to be planning a shortlist of three candidates. The FT says the favourite is Aleksandar Ivanovic, the head of asset management, or maybe Iqbal Khan and Robert Karofsky, who co-head wealth. COO Bea Martin is a fourth possibility.

Meanwhile...

Morgan Stanley increased bonuses in Asia by 20%. (Bloomberg) 

Conor Hillery, head of investment banking for EMEA at JPMorgan, says he's making "selective hires" for his European dealmaking team but is preparing a "big expansion in the Middle East" and "growing in some emerging markets like Turkey and sub-Saharan Africa.” This will happen irrespective of market conditions. (Financial News) 

Now China is looking at the trades of Jane Street, and others. (Bloomberg) 

Hedge fund Diameter Partners made money shorting First Brands' senior debt when it was trading in the 90 cent range because it thought it "smelled of fraud." Then it decided it wasn't so smelly and bought the debt for 30 cents on the dollar in the expectation that it would recover. It now trades at 20 cents on the dollar and Diameter has lost $100m. “A mere three months later, and the letters F-B haunt us every time we close our eyes.” (Bloomberg) 

Standard Chartered wants to set up crypto prime broking. (Bloomberg) 

When the cap on unfair dismissal payments is removed, banks might stop hiring or fire before it becomes applicable. “We would expect employers to be a lot more ruthless in operating probationary periods and terminating employment before employees reach the six-month mark." (Financial News) 

Puneet Sethi, a commodities and a rates trader, left Eisler and joined Millennium. (Financial News) 

The problem with private equity is the rigidity of commitments made under uncertainty about future public market returns. If an investor wants one third in private equity, one third in stocks, one third in bonds, and private equity is committed last, the amount committed to PE will vary according to the value of the other investments. (Substack) 

London bankers are no longer making money on their houses. 14.8% of London sellers sold for less in 2025 than they originally paid and the problem was particularly acute in the City of London, Kensington and Chelsea, Westminster, and Hammersmith and Fulham. (Financial Times) 

A Lazard banker is accused of making $41m in insider trading profits through illicit activities like hijacking user accounts on breast cancer forums and discussing how great the drugs they'd invested in were. (Bloomberg) 

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22  Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. 

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.