Euromoney pointed out the injustice when Rob Karofsky got second billing in the announcement in 2018 that he and Novelli were appointed co-presidents of the investment bank at UBS, to fill the impeccably tailored hole left by the resignation of Andrea Orcel.
Karofsky’s securities division was generating more than twice the revenue of Novelli’s advisory and capital markets unit at the time and the gap has only widened in the intervening years.
Equities sales and trading brought in $4.5 billion last year or close to 50% of all investment bank revenue. The advisory group generated just $634 million of revenue in 2020.
Ralph Hamers, who took over as group chief executive at UBS from Sergio Ermotti in November, stated that Novelli has decided “to retire from the banking industry to pursue new opportunities,” in a refreshing sign that a commitment to exciting digital solutions at UBS does not mean the abandonment of time-honoured euphemisms for management changes.
There is a potentially awkward co-head structure still in place for the wealth management group … at UBS
Novelli actually does have a new opportunity to pursue, and will be the next chairman of exchange group Euronext, subject to regulatory approval.
The new sole president of the investment bank at UBS earned the nickname “Killer” Karofsky when he was a young equity derivatives dealer at Morgan Stanley in New York and drew unwelcome tabloid coverage in the city during a later equities management role at Deutsche Bank.
If either of those points counted against him with former UBS chief executive Ermotti, they are clearly not an issue with Hamers, who now has a single direct report running one of the key divisions at the bank.
Potentially awkward
There is a potentially awkward co-head structure still in place for the wealth management group that is the most important business line at UBS, generating roughly half of both overall revenue and profit. It is also the only business where UBS is a global market leader.
Iqbal Khan runs wealth management in Europe and Asia, while UBS veteran Tom Naratil heads the unit in the Americas. Khan was given the additional title of president for the Europe, Middle East and Africa region at UBS by Hamers in January, but Naratil already had the same role for the Americas, so that change could be interpreted as a move to ensure strict parity between the wealth management co-heads.
Of course it could also be taken as a sign that there is enough tension between the two men to make absolute title equivalence necessary.
Hamers is effectively on probation as chief executive of UBS, given his lack of experience running a firm of its scale and diversity, so it might seem prudent to keep both men on board to avoid appointing one as sole head of wealth management and anointing an obvious potential internal successor to the top job.
