There are two schools of thought about Luqman Arnold, whose tenure as president of the group executive board of UBS AG ended abruptly after less than eight months in the job.
But everyone agrees about one thing: his sacking by chairman Marcel Ospel and replacement by asset management chief Peter Wuffli was a bolt from the blue.
“Normally this place leaks like a sieve,” says one UBS investment banker. “But there was not even a hint of a whisper about this.”
The putsch dispelled any doubts as to who actually runs UBS. Since Ospel took over as chairman and appointed Arnold as president of the executive board, it was unclear where executive power in the bank lay.
Although Arnold had responsibility for day-to-day operations, Ospel was reluctant to cede executive authority and the arcane structure of UBS only served to heighten the confusion.
Arnold was never given the formal role of chief executive and answered to the board of directors, chaired by Ospel.
Speculation within UBS says Arnold wanted to go further in restructuring the domestic business than the board deemed acceptable. But rumours that Arnold had planned deep job cuts in Switzerland were denied.
There was also talk that Arnold wanted to be more aggressive in using the balance sheet to support investment banking, particularly in the US. Ospel has ruled out a balance sheet-led approach – a causing friction with US investment bankers after the bank turned down a $3 billion loan to EchoStar, losing the business to Deutsche Bank and CSFB.
But UBS officials deny any specific reasons for Arnold’s dismissal, claiming only that there were “a number of differences of opinion”. So little significance did Ospel attach to the move that he did not even make himself available when Arnold was fired, leaving it to Wuffli to handle the analysts and media.
There was clear disappointment in London that Arnold, whose international background won him strong support within UBS Warburg, was being replaced by a traditional Swiss-German executive – who is viewed as much more of a yes man to Ospel than Arnold was ever likely to be.
“He always had a pretty clear view of his own capabilities and he was not the easiest guy in the world,” said one investment banker. “But he was well thought of and there is a lot of disappointment that he has gone.”
