Kenneth Cohen, the head of commercial real estate finance at UBS AG, is leaving to join Bank of America Corp. after Switzerland’s largest lender overhauled its compensation rules to limit risk.
The banker will become the global head of commercial real estate at the second-biggest U.S. lender, said Michael Nierenberg, head of the global mortgages and securitized products business at Bank of America. He will report to Nierenberg in New York.
Cohen, who arrived at UBS less than two years ago and previously oversaw commercial mortgage-backed securities at Lehman Brothers Holdings Inc., is joining Bank of America as it seeks to build market share in packaging loans linked to skyscrapers, hotels and shopping malls into bonds. Eighth-ranked Bank of America underwrote $2.3 billion in mortgages in 2012, compared with $4.1 billion for No. 4 UBS, according to the Commercial Mortgage Alert, an industry newsletter.
“Our plans are to grow this business,” Nierenberg said in a telephone interview today. “We have a strong existing team and will continue to make more hires over time.”
Megan Stinson, a spokeswoman for UBS, said she couldn’t immediately provide comment.
Sales of the debt are soaring as investors seek riskier assets with the Federal Reserve holding its benchmark lending rate close to zero into a fifth year. Issuance is forecast to climb by more than 50% to $70 billion in 2013, according to Credit Suisse Group AG. Almost $22 billion of the debt has been sold this year, according to data compiled by Bloomberg.
UBS cut its 2012 bonus pool, including pay deferred into future years, by 7% to 2.5 billion Swiss francs ($2.75 billion), the Zurich-based bank said Feb. 5. About 500 million francs of bonuses will be paid in contingent capital bonds, which will be written off if the common equity ratio falls below 7% or UBS needs a bailout.
CEO Sergio Ermotti is reconstructing UBS as stricter capital requirements and sluggish client activity hurt the investment bank’s profits. UBS in November announced plans to eliminate 10,000 jobs, paring down capital intensive businesses such as fixed-income trading.
UBS last year moved about 20 commercial-mortgage bond bankers to Lewis Ranieri’s Situs, a commercial real estate consulting firm, to reduce headcount in the unit in an effort to cut costs while maintaining its presence in the $550 billion market, Cohen said in a Nov. 12 interview.
Bank of America plans to increase loan originations in 2013, working closely with both the commercial bank and the wealth management businesses, Nierenberg said.
“This gives us the opportunity to grow our real estate footprint in the investment bank as well as work closely with our colleagues in other parts of the bank to fully serve our clients,” he said.
