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Appointments prompt UBS CEO succession speculation

Published 12/06/2010, 07:49 AM
Updated 12/06/2010, 07:52 AM

* UniCredit's Ermotti seen as potential future CEO

* Gruebel not seen going until UBS stronger

* Surprise, disappointment at departure of CFO Cryan

* Shares down 2.2 percent, underperform index

By Emma Thomasson

ZURICH, Dec 6 (Reuters) - The hiring by UBS of UniCredit's former top investment banker Sergio Ermotti has prompted speculation the Swiss bank could be lining up successors for Chief Executive Oswald Gruebel.

Ermotti, a Swiss national, will take up the role of chairman and chief of Europe, Middle East and Africa in April, UBS said late on Friday as it also announced that Tom Naratil will succeed Chief Financial Officer John Cryan in June.

"Ermotti ... could become a successor for Oswald Gruebel," Deutsche Bank said in a client note.

Gruebel, 67, and Chairman Kaspar Villiger, 69, were brought in from retirement in 2009 to clean up Switzerland's biggest bank after it was brought to its knees in the financial crisis.

Villiger said in October the bank needed some stability for now but admitted neither he nor Gruebel were young and said that the bank had set up a panel to think about possible successors.

Gruebel is not seen as in a hurry to step down until the bank is closer to the medium-term goal he set last year of an annual pretax profit of around 15 billion Swiss francs ($15.40 billion), with much dependent on its struggling investment bank.

"It is logical that Ermotti could be a potential successor but at the moment it is premature. His profile would fit as well as others on the board," said Sarasin analyst Rainer Skierka.

"Gruebel won't want to go until he can hand over a success. We need to see how the turnaround develops."

Other board members seen as potential CEO candidates include Carsten Kengeter, Investment Bank CEO, Lukas Gaehwiler, CEO of UBS Switzerland and Juerg Zeltner, CEO Wealth Management.

UBS shares were down 2.2 percent at 15.37 francs at 1120 GMT, compared to a 1.2 percent weaker Stoxx banking index.

WELL-KNOWN FORMER MERRILL LYNCH BANKER

Unicredit announced Ermotti's resignation in October after he was passed over in a management reshuffle following the appointment of new Chief Executive Federico Ghizzoni.

A Unicredit source said Ermotti, a former Merrill Lynch co-head of global equities markets who is well known in international financial circles, decided to quit because he did not like the retail banking focus spearheaded by Ghizzoni.

Ermotti, 50, joined UniCredit in 2005 as head of the markets and investment banking division, after 18 years at Merrill Lynch. He became deputy CEO in 2007 with responsibility for corporate and investment banking and private banking.

Sarasin's Skierka said Ermotti's equity experience could complement the fixed income, commodities and currencies background of investment bank head Kengeter.

UBS reported a shock investment banking loss for the third quarter, overshadowing the fact it has stopped bleeding client money for the first time since early 2008, a key turnaround goal for the world's second biggest wealth manager.

Cryan, who took over as CFO at the height of the financial crisis in 2008 and helped rebuild the bank, had also been seen as a potential future CEO and his departure came as a surprise.

"Even if he seems well prepared for his new role, we believe it will be a challenge for the new CFO to achieve the high level of confidence and ease the market placed into John Cryan," said Vontobel analyst Tobias Bruetsch.

Naratil, a 49-year-old American, has been CFO and Chief Risk Officer of UBS Wealth Management Americas since 2009. He started his career in 1983 at the Paine Webber brokerage UBS bought in 2000.

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