Another way of viewing the corporate flight of Fortune 500 companies in Stamford may be the volatile nature of the financial services industry. Perhaps Stamford was simply unfortunate to have housed the American headquarters of two European banks, which are facing unique financial challenges as the entire continent of Europe struggles to cope with several debt crises. RBS, or the Royal Bank of Scotland, which is now controlled by the British government, has fewer than half the 225,000 employees worldwide than it had at its peak in 2007, at the time of the Connecticut campus construction. Plans to reduce its workforce in Connecticut, which was at its peak 2,400 people to fewer than a thousand has made its large, glittering building a ghost town. The number of UBS employees in Stamford fell to 2,000 last year, from 4,400 before the crisis, and more cuts have been announced. Besides the banks in Stamford, HSBC and Deutsche Bank are the most recent banks to restructure their global workforce. The financial crisis in Greece further hinders recovery by European banks.

It is probably due to these problems in Europe that Wall Street banking operations in places like Manhattan and Stamford are forced to scale back  because of a combination of fraudulent behavior, tighter government regulations, and a changing economy tilting more towards technology. The industry that is generally and vaguely known as “Wall Street” is a mix of firms historically based in Lower Manhattan, associated with the issuance and trading of financial products like stocks and bonds. Today, however, the financial industry encompasses much more than these businesses and encompasses hedge funds and private equity, as well as commercial banking. Certain segments of the industry, especially private equity funds (which face less government scrutiny) and hedge funds (whose complicated financial strategies thrive more in volatile times) have excelled in recent years. But at companies like RBS and UBS, whose bread and butter is the historical businesses of Wall Street, there is no more glittering promise of wealth and growth. Thus, it helps to turn our focus to Stamford, which was once the reigning center of trading activity in North America outside of Manhattan. The trading floors, which, according to the New York Times, “seemed to hover beside Route I-95 like floating airships,” were the “economic engines” of the RBS and UBS operations in Stamford.

Back in 2002, the first traders walked onto the UBS trading floor, a floor large enough to host basketball courts 23 times over. The trading floor is a structurally open, so that one trader at the end of the hall could shout or gesture to another trader at the opposite end, with nothing to hinder communication. These 1,400 traders traded different products: some bought and sold stocks, currencies or bonds, and profited from the difference in each trade. Other trading desks created financial contracts (also known as derivatives) which made it feasible to bet on the changes in stock prices or interest rates. In fact, before the financial crisis, some of the most profitable desks were the ones who bought up mortgages and other risky loans, bundling them into even riskier debt instruments. Trading desks accounted for a large majority of the profits at bulge-bracket banks pre-2008. However, it was precisely these trading operations, particularly mortgage trading, that was the main source of the tremendous losses suffered by RBS, UBS, and the like. When the subprime mortgage market collapsed, it forced these banks to take government bailouts.

Thus, in the midst of the crisis, RBS and UBS eliminated hundreds of trading jobs in Stamford. Almost suspiciously quickly, the government bailouts allowed both RBS and UBS to rebuild their operations in 2009 and 2010. Simon Wilson-Taylor was a former Managing Director of the UBS fixed-income trading department, hired by UBS in Stamford during this time to oversee the bank’s bond trading. According to Wilson-Taylor, when he first arrived at UBS, the trading floor was half full. But half a year later, each row was back at capacity, filled with traders.

The hiring spree of UBS was tempered by a mix of different things. Central banks kept interest rates low, to encourage borrowing and stimulate the economy, but these depressed interest rates translated to smaller interest payments on the huge amounts of bonds and loans they owned. Regulator’s desires to cut down on risky trading desks particularly impacted RBS because the British government was now the majority owner, due to the bank’s bailout. With a government-controlled board, executives urged the company to focus more on its British operations for retail and corporate clients and less on the global trading floors, primarily the one in Stamford.

At an industry conference in March, RBS CEO Ross McEwan, announced: “As we increasingly wave goodbye to some of the hangovers from our past, a new model will emerge that is set up to deliver sustainable returns from a much lower risk profile.” At UBS, C-suite executive focus has shifted to their more sustainable and long-term wealth management business and banking for ultra high net worth clients. While they have promised Connecticut to leave at least 2,000 jobs in-state, the reality is that many of these jobs will be dispersed throughout the state, and what is left of their trading operations are being moved back to New York. Only time will tell what will happen next.