* UBS makes temporary CEO Ermotti permanent
* Axel Weber to be proposed as chairman from next May
* Investor day in New York on Thursday
* Ermotti set to scale back investment bank
* Shares down 3 pct, underperform sector
By Katharina Bart
ZURICH, Nov 15 UBS AG made
stand-in Sergio Ermotti permanent chief executive on Tuesday and
brought forward the start date of chairman designate Axel Weber,
in a move to reassure investors following the Swiss bank's $2
billion trading scandal.
Ermotti, a 51-year-old from Switzerland's Italian-speaking
Ticino region, was appointed interim CEO in September after
Oswald Gruebel quit the bank over the trading losses.
Former Bundesbank president Weber will be proposed as
chairman at the annual general meeting in May, a year earlier
Ermotti's relationship with Weber will be closely scrutinised
as sources said the German had seen him as a fallback option and
had explored other, outside candidates.
Weber said in a statement released through UBS he
would be in Switzerland in February to exchange ideas with his
new colleagues and meet major clients.
"I know Sergio Ermotti personally. I had previously met him
during my time at the Bundesbank. I have also spoken to him
often in the last few weeks. I welcome his appointment as UBS's
Group CEO and look forward to working together with him," he
The board originally said it might take up to six months to
replace Gruebel, but pressure mounted for a decision ahead of an
annual investor event on Thursday and as sources said top UBS
managers jockeyed for position in the CEO race.
"It was important for UBS after the resignation of Oswald
Gruebel that there be no leadership vacuum," outgoing chairman
Kaspar Villiger said.
UBS said the board backed the lender's strategy to scale
back its investment bank and focus on its core wealth management
business, which will be detailed at the investor event in New
A source familiar with the situation said Ermotti would not
make more job cuts on Thursday after the bank announced recently
3,500 positions would go.
UBS shares were down 3 percent at 10.62 francs at 1331 GMT,
compared with a 2.2 percent weaker European banking index
The news was also welcomed by analysts and investors.
"Today's announcement is positive as it provides UBS
with more certainty about its leadership and hence brings in
stability," said Vontobel analyst Teresa Nielsen.
The appointment represents a rapid ascent for Ermotti, a
former UniCredit deputy boss who joined UBS in April. Before
UniCredit, he spent most of his early career at Merrill Lynch,
where he rose to co-head of global equity markets.
Charming and well-dressed, Ermotti is seen as a bridge-
builder whose style contrasts with that of the gruff Gruebel who
upset Swiss politicians by lobbying against tough capital rules
designed to prevent another state bailout of the bank.
"It's a good step. It was making things difficult having an
interim CEO with a chairman who was sort of on his way out as
well, said Florian Esterer, senior portfolio manager at
Swisscanto, which holds over 9 million UBS shares.
Ermotti's most urgent priority is to restore trust with
UBS's wealthy private clients following the trading scandal and
to scale back the investment bank amid a glut of new regulations
for riskier activities.
"No profit is worth more than our reputation as a bank,"
Sergio Ermotti told media in Zurich on Tuesday.
Ermotti has played up his Swiss roots, saying he is
motivated by a desire to return his country's flagship bank to
its former glory as it prepares to celebrate its 150th
anniversary next year.
Near-fanatical about sports as a teen, Ermotti originally
wanted to become a ski teacher, but decided against it after an
apprenticeship at Corner Bank, a local Ticino lender.
Ermotti's first major task will be to present UBS's new
strategy to investors on Thursday. He said he would give new
targets and details on the bank's future risk appetite at the
Investment banking head Carsten Kengeter has so far been
spared in the cull following the trading scandal that claimed
Gruebel as well as equities co-heads Francois Gouws and Yassine
Bouhara. Influential investor group Ethos has called for
Kengeter to step down over the losses.
Ermotti told a news conference that speculation over
Kengeter's future was inappropriate. Kengeter is part of the top
UBS management team and would hold a presentation on the
securities unit at Thursday's event, Ermotti said.