July 1, 2011 / 11:28 AM / 8 years ago

Weber surprises again with UBS move

FRANKFURT (Reuters) - For a man who describes himself as conservative, Axel Weber is full of surprises.

Former German central bank chief Axel Weber looks on after he was relieved of his duties at Bellevue castle in Berlin, April 29, 2011. REUTERS/Thomas Peter

The former Bundesbank chief’s nomination to become chairman of Swiss bank UBS (UBS.N)UBSN.VX is the second time this year he has shocked the global financial community after abruptly pulling out of the race to become European Central Bank president in February.

Weber’s worry about taking the ECB helm was always that the euro zone was heading in the wrong direction. Now he has chosen to step outside the currency bloc and into the sanctity of Switzerland as chairman of Europe’s largest wealth manager.

The UBS move “will surprise some of the commentators who predicted that Weber would look for an executive role in Germany,” said Jan Pieter Krahnen, a professor at the Goethe University in Frankfurt who worked with Weber in the late 1990s.

Weber’s Bundesbank resignation left Berlin without a candidate for the ECB presidency, and his nomination for the UBS job creates another problem in Germany, where he was a leading contender to succeed Deutsche Bank (DBKGn.DE) CEO Josef Ackermann.

Weber has never been afraid to ruffle feathers.

As Bundesbank chief, he clashed with Nicolas Sarkozy when the French president leaned on the ECB to cut interest rates.

He also infuriated the German government by pulling out of the ECB presidency race without consulting Chancellor Angela Merkel — a decision rooted in his opposition to the central bank buying bonds and straying from its inflation-fighting role.

His UBS move is a coup for the Swiss bank and a blow for Deutsche Bank.

“Axel Weber is one of the smartest bankers on this side of the Atlantic,” said Florian Esterer, senior portfolio manager at Swisscanto, which manages 57.6 billion Swiss francs ($68.5 billion) in assets and holds UBS shares worth more than $180 million.

“He knows banking inside out. It could work out very well for UBS,” he added. “We think this is a smart move.”

Originally an academic, Weber was an adviser to the German government before serving for seven years as Bundesbank chief. The contacts he made during this time will serve UBS well as policymakers reshape the banking sector’s regulatory profile.

UBS is one of the top globally systemically important financial institutions (G-SIFIs), which under new rules face a capital surcharge of up to 3 percent in an effort to ensure taxpayers don’t have to come to the rescue next time a lender gets into difficulty.

REGULATORY INSIGHT

Weber’s insight into the complexities of the new regulations will help UBS shed light on the new rules, and his policymaking knowledge will help it gauge when central banks will withdraw liquidity support — now a key pillar of bank profits.

One potential drawback is that he has no private sector experience. But banking profits in the post-financial crisis world are determined more by dealing with regulations than by tapping new revenue streams. This plays to Weber’s strengths.

A stout man who enjoys a beer, the 54-year-old is direct but can also be charming and from an early age showed he had the skills to lead a diverse group.

“You could see it then already,” said Bernd Mueller, Weber’s mathematics and physics teacher from 1973 to 1976, who remembered him being elected as president for his school year.

“He got on very well with the other students,” he said in Kusel, Weber’s home town of just 5,000 people. “He wasn’t a geek. He was always ready to help the others.”

Describing himself last year as a “self-confessed conservative central banker” — a profile that may work well in conservative Switzerland — he took up a one-year teaching post at the University of Chicago after quitting the Bundesbank.

Beyond that, Weber has had limited experience working outside Germany.

He has shown a self-deprecating, almost English, sense of humor — perhaps under the influence of his British wife.

At a Bundesbank-hosted event earlier this year, he recalled how he and a group of other economists used to try to predict the level Germany’s DAX blue-chip share index would hit at the year’s end, but that he doesn’t do that any more.

“I always lost,” he said.

He might want to work on that before taking the helm of Europe’s largest wealth manager.

Additional reporting by Martin de Sa'Pinto in Zurich; Editing by Noah Barkin and Will Waterman

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