UBS sets major reshuffle atop wealth management unit

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UBS Group Chief Executive Officer Sergio Ermotti moved to quell concerns surrounding the bank’s long-term succession plan with a radical overhaul of the top ranks, hiring a star banker from a rival and ousting some of its most senior executives.

After a year marred by huge legal fines, questions about succession planning and a deepening slump in share prices, Ermotti unveiled a revitalized board, replacing wealth management co-head Martin Blessing with former Credit Suisse Group AG banker Iqbal Khan. Blessing, a former Commerzbank CEO, and Ulrich Koerner, president of asset management and Europe, Middle East and Africa, will both leave the bank as part of the changes.

Other appointments — including the elevation of Suni Harford as asset management head and Sabine Keller-Busse as EMEA president — are an attempt by the bank to replenish a management board weakened by top level departures in recent years. The revamp also positions Khan, 43, as a future CEO candidate after Chairman Axel Weber said earlier this year that the bank was in the early stages of succession planning as he and Ermotti enter their eighth year in charge of the world’s largest wealth manager.

The two women could also become contenders to take over the top job when Ermotti eventually steps down or seeks to become chairman. Keller-Busse is currently chief operating officer and a former partner at McKinsey. Her ascent has been steady since she joined UBS almost a decade ago, having previously led human resources and Credit Suisse’s private clients region for Zurich. She is said to be well-liked by Weber. Harford joined UBS just two years ago after nearly a quarter century with Citigroup.

Khan, who will co-lead the wealth unit with Tom Naratil, will be tasked with boosting UBS’s $2.5 trillion wealth management franchise, a key business that has been whiplashed by volatile results in recent years. At Credit Suisse, profit surged during his time as head of international wealth management.

This is the second major reorganization at UBS’s wealth division since Blessing replaced Juerg Zeltner in January 2018, when the firm merged its international and American units into a single business. Managing money for wealthy people has come under pressure worldwide amid muted client activity and wild market gyrations. Yet, wealth management can potentially be one rare bright spot for European banks as investing banking revenues decline and a prolonged period of low interest rates hurts profits.

“Iqbal Khan clearly has a strong track record, boosting Credit Suisse’s international wealth management’s adjusted pre-tax profit by almost 80% in three years,” Vontobel analysts said in a note to clients on Thursday, adding that the addition of Khan and Harford mark a “rejuvenation” of UBS’s board.

Khan has built a reputation as a charismatic leader, able to motivate teams and popular with the bank’s relationship managers. He’s known for his attention to clients, such as the occasion he brought chocolates from Zurich’s famed confectioner Sprungli to a convalescing client. That kind of approach is a contrast to the more matter-of-fact style of predecessor Blessing, a former consultant who made a name for himself restructuring Commerzbank following its rescue by German taxpayers during the global financial crisis.

His departure had been widely expected after the global wealth management unit posted erratic results since the two former wealth businesses were combined into a single unit last year. Clients pulled $1.7 billion from the unit in the second quarter, where earnings were lower than expected. He’d earlier been seen as a contender to succeed Ermotti when he was appointed after about eight years in charge at Germany’s No. 2 bank, after shrinking the bank’s pile of bad loans and restoring the dividend.

As part of the changes at UBS, Koerner — president of asset management and Europe, Middle East and Africa — will step down. His responsibilities will be divided between Suni Harford, who takes over asset management and Sabine Keller-Busse, who becomes president of EMEA.

The hiring of Khan — whose rift with Credit Suisse CEO Tidjane Thiam led to his departure from the Swiss firm this year — is a coup for Ermotti, breaking a bad run for the executive since the beginning of the year when he gave a de facto profit warning at a conference and the bank received a huge $5 billion fine in France.

Khan’s ascent at Credit Suisse was rapid. He joined in his late 30s after rising through the ranks of Ernst & Young‘s Zurich-based assurance division, where he audited UBS. He joined Credit Suisse in 2013 and was named head of the bank’s international wealth-management unit when it was created. The bank may now be concerned he’ll seek to hire former colleagues.

When Thiam joined Credit Suisse and revamped his executive team, Khan was already one of the most influential people there, and his career accelerated after Thiam promoted him to lead international wealth management. Khan helped fold worldwide asset management and private-banking activities into a single unit and also helped to build up capital markets and a lending platform for billionaire clients.

Khan’s relationship with Thiam had soured in recent months, according to people with knowledge of the matter. When a corporate reorganization came in February, Khan’s brief stayed the same, even as two colleagues were elevated to the executive committee. Tensions mounted as Khan’s name surfaced in media reports as a candidate to replace Bernhard Hodler as head of Julius Baer. That job eventually went to Philipp Rickenbacher, a little-known internal candidate.

--With assistance from Jan-Henrik Förster.

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