The major bank is making personnel changes that bear the signature of President Colm Kelleher and CEO Sergio Ermotti. Internal candidates are given the opportunity to apply for the top job. But that is not enough.
On February 20, 2020, when UBS CEO Sergio Ermotti introduced his successor together with then-President Axel Weber, he did not look particularly happy. Even after the media conference, he let it be known that two things were bothering him.
On the one hand, that the UBS share price had not developed better under his aegis (2012-2020). On the other hand, he regretted that the committee around President Weber spurned the candidates that Ermotti had built up internally.
Instead, the board of directors decided on Ralph Hamers. Remember, this was the Dutch banker who had made a name for himself by digitizing the business of his former employer ING (and was quickly nicknamed the “Google banker” in Switzerland).
But he was also the man who first had to be introduced to UBS’s core business, global asset management. And who irritated the long-established client advisors with ephemeral explanations of agile working in flexible team structures.
The CS changes everything
But then Credit Suisse failed, and UBS rushed to the rescue on March 19, 2023. The major bank thereby acquired growth at a relatively low cost in one fell swoop. However, by taking over the black box CS, it also took enormous risks – not only financial ones, but also with regard to the elimination of legacy issues and the integration of the functioning parts.
Against this backdrop, current President and Wall Street veteran Colm Kelleher decided to remove Hamers and bring Ermotti back to the top of UBS. Since the takeover of Credit Suisse, flowery purpose statements are no longer in demand, but rather experienced bankers who can get things done. Ermotti and Kelleher fit this profile.
14 months later, it can be said that Ermotti is using his second round at the helm of the bank to make up for the two losses. The share price has increased by over 50 percent since March 19, 2023, also because UBS is consistently moving forward with the integration of Credit Suisse. In addition, the bank has now really opened the race for Ermotti’s successor this week.
Five viable candidates
Two personnel changes stand out from the changes in the UBS Group Executive Board announced on Thursday. Iqbal Khan, previously the sole head of the most important division, global wealth management, will now only be co-head, but will take over the Asia region. Khan will be appointed co-head of Global Wealth Management alongside Rob Karofsky, previously head of Investment Banking. He will also be responsible for the USA region.
This personnel reshuffle bears the signature of President Kelleher, who worked for Morgan Stanley for a long time. The Wall Street giant has a kind of rotation principle. It is not enough to manage a department reliably and well in the second hierarchy level below the boss. Roles are changed, expanded, redefined.
Only when you take managers out of their comfort zone – Khan has never lived outside Switzerland, investment banker Karofsky has never had any real responsibility in asset management – can they show what they are really capable of.
With the Swiss head Sabine Keller-Busse, Beatriz Martin Jimenez, who is cleaning up CS’s legacy issues, and Aleksandar Ivanovic, who was recently entrusted with asset management, three other members of the Group Executive Board have challenges ahead of them that they can work on and prove themselves.
That makes at least five internal candidates, which Kelleher and Ermotti are now testing. The chances are intact that the UBS CEO, when he is dismissed for the second time, will be able to present an internal successor with great enthusiasm – hopefully with a higher share price.
There is a risk of operational blindness
But especially from the perspective of shareholders, it is essential that UBS does not become blind to the company’s internal processes, but also observes external candidates and – if they have the potential and are suitable – brings them into the bank straight away.
It is a given that it will take at least another three years for the CS takeover to be fully digested and that Sergio Ermotti will stay that long. Enough time to put other candidates through their paces on the job. Ermotti will not have to stand next to a Hamers reincarnation with a sour expression on that distant day.