As UBS executives and board members convened for annual meetings this week in Zurich, one subject was impossible to ignore: succession planning and the future of Chief Executive Officer Sergio Ermotti.
It’s a topic that’s been forced into the open in recent weeks at the world’s largest wealth manager, testing a long-standing partnership between Ermotti and Chairman Axel Weber. The bank’s hunt for top executives who could become the next CEO has gathered pace after the departure of promising leaders in recent months and against a backdrop of slumping shares.
The two men at the center of the search are seeking to take control of the narrative and signal a unified front. While details and the timeline of any leadership changes are still fluid, Ermotti and Weber — who publicly emphasize the bank’s internal talent — are also privately acknowledging the need for outside executives to strengthen the management bench, according to 10 people familiar with the matter interviewed by Bloomberg, who spoke on the condition of anonymity.
In Zurich on Monday night, where the executive board gathered for dinner ahead of a Wednesday meeting, Ermotti stressed that he and Weber are aligned, according to a person with knowledge of the discussions. He also signaled that any change at the top wouldn’t be immediate and will happen over time.
A UBS spokesman declined to comment.
The challenge of replenishing management is falling to two men with widely divergent backgrounds and experiences. Ermotti, 58, is one of the longest-serving bank CEOs in Europe, with a 32-year career in finance at banks including UniCredit and Merrill Lynch and is at ease on the trading floor. Weber, 61, studied economics and public administration and served as a member of the European Central Bank’s governing council from 2004 to 2011.
It’s still unclear if UBS would create new positions, or existing executives would make way for new hires. The bank has co-heads for both its key wealth management and investment banking businesses.
Ermotti and Weber have overseen a push to pivot the bank away from investment banking since the global financial crisis to focus on managing money for the rich. The firm merged its two wealth management businesses last year under co-heads Martin Blessing and Tom Naratil, making that unit the centerpiece of a plan to boost growth. Those plans haven’t helped reverse a share decline in the past year as growth across Europe has slowed.
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UBS’s stock fell 29% in the past year, slightly worse than the broader banking market. It’s outperforming rivals such as Credit Suisse, which declined 33%, and Deutsche Bank, which lost about half its market value last year. Still, the shares have fared worse than counterparts in the U.K.
UBS began intensifying its succession planning after the departures of top dealmaker Andrea Orcel and former wealth head Juerg Zeltner. In the latest twist, Orcel’s exit to lead Banco Santander ended with the Spanish bank rescinding its offer following a dispute over his pay. UBS held a hard line, withholding bonuses he was owed from previous years amounting to tens of millions of dollars. That would have left Santander to make it up to the executive, which it decided not to do. Orcel doesn’t plan to return to the Swiss bank, a person with knowledge of the situation said.
As executives left, UBS started considering external candidates who could eventually lead the bank, Bloomberg reported in December. A few weeks later, people familiar with the matter said that the Swiss bank had held preliminary talks with Bank of America’s ex-investment banking head Christian Meissner about joining as a potential successor.
While UBS didn’t comment on the plans, Weber confirmed in a Bloomberg TV interview that the bank was in early-stage succession discussions and considerations as to who would eventually take over. That interview took some inside the bank by surprise — according to people familiar with the matter — as his comments marked a shift from repeated previous statements that the two men would simply continue working together until 2022.
“The CEO and I are in our eighth year at the bank,” Weber said in the TV interview. “That’s a point in time where you need to start thinking about what is it you’re going to do and how you’re going to pass the bank over to your successors — I’m deliberately talking plural — and in what sequence you do that. We’re at the very early stage of those discussions.”
For his part, Ermotti has been holding discussions with potential candidates, people familiar with the matter said. Asked about CEO succession at the bank’s investor day in October, he said it was a question for the board, adding “as long as I have the energy and the passion for what I do and people believe that it’s okay, then I will do it.”
