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Banking

Abigail with attitude: Shortlist for full-time UBS chief executive role looks very short indeed

The key issue is who will succeed Grübel as chief executive of the group. And don’t let’s forget the grisly fact that this CEO will be the fourth CEO in four years at UBS. Quite frankly, that is a disgrace.

To make matters worse, there will be a changing of the guard at the chairman’s office as well. Axel Weber, the former president of the Bundesbank, is due to take over from 70-year-old Kaspar Villiger as chairman in mid-2013. Some say that Villiger is now a lame duck and he should step aside, allowing Weber to provide clear direction to the board. Any way you look at it, the UBS succession is a mess and investors’ queasiness will not be quelled by the fact that UBS’s CFO, Tom Naratil, has only been in the job for four months.

The board is conducting a search for a new group chief that may drag on in to early 2012. Sergio Ermotti, the bank’s CEO in Europe, has been appointed as interim chief executive. Ermotti only joined UBS in April 2011.

Since he arrived at UBS, a number of sources have told me that Ermotti was effectively the group CEO in waiting. He is certainly a prime contender. But Ermotti doesn’t know the bank well and has limited experience of commercial or retail banking. However, a mole reports that he is well connected in Switzerland, especially in the south, and speaks all three national languages.

Ermotti spent most of his career at Merrill Lynch and rose to become the co-head of global equities. He joined UniCredit in late 2005 to run the investment bank and was appointed UniCredit’s deputy group chief executive in 2007. He quit that bank to join UBS when he was passed over for the UniCredit chief executive role, which went to Federico Ghizzoni.

If I were being harsh, I might ponder why someone who was not considered the best choice to run Italy’s largest bank where he had worked for five years, is now considered the leading contender to run Switzerland’s largest bank where he has worked for five months.

Sources tell me that Ermotti is charming and capable. I look forward to meeting him in due course. Away from Ermotti, the field is fallow. I’ve heard Bill Winters, the former co-head of JP Morgan’s investment bank, mentioned. But he has now moved on and has set up an asset management firm, Renshaw Bay. Anyway, I’m not convinced the cultural fit would be ideal.

It’s a terrible testament to the industry that I can hardly come up with any other potential outsiders. A Swiss source murmurs: “UBS needs to go for someone in the Swiss establishment or a private banker to take the firm back to its roots.” Occasionally, other UBS insiders are mentioned as potential group chiefs: Ulrich Korner, group COO, or Jurg Zeltner, head of wealth management. But my sources insist that Ermotti would be a better choice.

The other question that weighs on my mind is claw-backs. Given the enormous $2.3 billion loss suffered in the investment bank, will Carsten Kengeter’s SFr9.3 million bonus for 2010 be pared back? And what about the 2010 bonus awarded to the co-heads of the equities’ divisions who were Adoboli’s line-managers? Shareholders need reassurance on this point. If there are no claw-backs, then the industry will have reached a new low of moral hazard. 

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Shortlist for full-time UBS chief executive role looks very short indeed

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