UBS takes its own advice for bosses

Smart-suited Swiss private bankers offer wealthy clients a palette of services. One is succession planning. UBS, the world’s biggest wealth manager, has finally drawn up its own scheme. A reshuffle on Thursday revamped the top team below Sergio Ermotti, CEO since 2011. The effect was to start the race to replace him. For now the frontrunner is the youthful Iqbal Khan, a recent defector from local rival Credit Suisse, who becomes joint head of the main wealth management unit.

Having a credible transition plan is a relief for Axel Weber, the former German central bank president who chairs UBS. It will not make it any easier for Ermotti or Weber to revive its dismal share price performance.

A deteriorating global economic environment is buffeting UBS. Financial market turmoil has stopped wealthy clients from trading. Interest rates plunging deeper below zero have squeezed margins. In February a French court levied a €3.7bn fine in a case related to tax evasion by clients. In June, an analyst’s note upset clients in China.

UBS’s downsized investment bank, meanwhile, still causes earnings upsets. Ermotti sees it as essential for serving the ultra wealthy, especially in Asia, and combating competition from big US rivals. He successfully executed UBS’s shift to wealth management after the global financial crisis. He is now UBS’s longest-serving CEO since it was formed by a 1998 merger.

Thursday’s reshuffle implicitly acknowledged change was needed. The big loser was Martin Blessing, scion of a German banking family, who lasted just three years at UBS. His replacement, Khan, quit Credit Suisse amid tensions with its boss Tidjane Thiam. Other challengers include Sabine Keller-Busse, COO, and Tom Naratil, cohead of wealth management. Resulting internal strife could be creative, or destructive. Ermotti’s job will only become harder if it is the latter. /London August 29

/© Financial Times 2019