July 19, 2011 / 11:10 AM / 9 years ago

Wanted: CEO for Swiss UBS; Germans need not apply

* Former UniCredit deputy CEO Ermotti internal frontrunner

* UBS won’t want two Germans at helm for long

* Weber could help UBS find candidate

* Deutsche Bank risk head Baenziger another Swiss contender

* Gruebel in no hurry to leave

By Emma Thomasson

ZURICH, July 19 (Reuters) - UBS AG’s appointment of ex-Bundesbank head Axel Weber as future chairman has made one thing clear: when the Swiss bank appoints a successor to CEO Oswald Gruebel, it won’t pick another German.

Weber has already said “generation change” will be one of his top priorities at UBS, stoking speculation about who will succeed Gruebel, even though Weber only joins the board next May and takes over from Kaspar Villiger as chairman in 2013.

The current internal frontrunner is Sergio Ermotti, who was already touted as a possible candidate last year when he was named as UBS’s chief of Europe, Middle East and Africa after he was passed over for the CEO job at UniCredit .

Ermotti, a former Merrill Lynch co-head of global equities markets who is well known in international financial circles, has both the investment banking and wealth management experience that is critical for a future UBS boss.

“They’ve appointed a chairman who’s got no business experience,” said Helvea analyst Peter Thorne. “Ermotti is obviously a good candidate. It needs to be someone like him who’s got some real experience.”

Another bonus is that the 51-year-old is Swiss, from the Italian-speaking Ticino region, although he has spent most of his career outside the country.


Weber’s appointment has probably dashed any remaining chances for Carsten Kengeter, the German head of UBS investment banking who was the highest-paid executive last year but whose star has faded as he failed to stem an exodus of bankers.

“I don’t believe it is going to be a German person. The most important is to have somebody who is well-known in the industry,” said Vontobel analyst Teresa Nielsen.

Anti-German sentiment has been on the rise in Switzerland amid a big influx of German immigrants, often seen as brusque and arrogant by their Alpine hosts.

Bjorn Johansson, Switzerland’s leading headhunter, said: “UBS could continue the tandem solution they had with Kaspar Villiger and Oswald Gruebel. So a Swiss CEO could join a German chairman after Gruebel steps down.”

Gruebel, a 67-year-old German who previously ran Credit Suisse , and es-Swiss finance minister Villiger were brought out of retirement in 2009 to help clean up UBS after it almost collapsed during the financial crisis.

A repeat of the Swiss-German tandem would also rule out Robert McCann, who Gruebel persuaded to take over UBS Wealth Management Americas in 2009. Ermotti and McCann had crossed paths before at Merrill Lynch — McCann took up the job of vice-chairman of wealth management in 2003 just as Ermotti stepped down from the U.S. bank.

After Weber was announced future chairman on July 1, Switzerland’s Handelszeitung newspaper called Ermotti the “hottest hopeful” to replace Gruebel.

But some analysts doubt the well-dressed investment banker has the gravitas for the job and have also questioned his performance during the financial crisis, even though his division delivered more than half UniCredit’s profit last year.

“He takes clients out, he’s got a nice tan, but he doesn’t have the charisma to run a place like UBS and to cope with the risk,” said one Italy-based analyst who declined to be named.

Ermotti could be looking to change that impression as he takes charge of handling UBS’s fraught relationship with regulators in Europe.


If he fails to convince, UBS could be forced to look outside, given that other executives like Lukas Gaehwiler, CEO of UBS Switzerland, and Juerg Zeltner, CEO Wealth Management, lack sufficiently broad or international experience.

Once Deutsche Bank (DBKGn.DE) settles its own succession battle over who will replace CEO Josef Ackermann, Weber’s familiarity with key members of the German bank’s management board could help him poach talent for UBS.

Hugo Baenziger, chief risk officer at Deutsche, could be ideally suited, given his Swiss nationality and experience working at Credit Suisse and the Swiss regulator, analysts say.

“It is logical that those who are overlooked at Deutsche are candidates for other banks,” said Sarasin analyst Rainer Skierka.

Alongside Weber, other UBS board members who will have a say in the succession decision include Michel Demare, the Belgian CFO of industrials group ABB, Bruno Gehrig, former chairman of Swiss Life and former vice chairman of the Swiss National Bank, as well as ex-Morgan Stanley CFO David Sidwell.

One of their toughest tasks might be convincing Gruebel it is time to go. The bank has stabilised but is still far from achieving ambitious targets he set in 2009.

Sources close to the CEO say he does not want to leave in 2013 at the same time as Villiger and can imagine working alongside Weber for a while, Der Sonntag newspaper reported. “I don’t think he will go yet because the job is not yet done even if he has led the bank into calmer waters,” Skierka said.

But if Gruebel is forced to abandon his targets — as Villiger has hinted might happen — and the bank decides to scale back its fixed income business, then the board might have to find a new figurehead fast.

“There is no particular hurry unless they decided to have a more radical change ... and downsize the investment bank, then they would need someone new,” said one analyst. (Additional reporting by Ian Simpson in Milan, Edward Taylor in Frankfurt, Albert Schmieder in Zurich; Editing by David Holmes)

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