In a surprise move, the Swiss bank UBS said late on Thursday that its chief executive, Peter Wuffli, would be succeeded by his deputy, Marcel Rohner, effective immediately.
The abrupt power shift at UBS, one of the world's largest money managers for wealthy individuals, comes amid growing criticism about rising expenses and disagreements over strategy at the bank.
UBS has also suffered a string of defections in its US investment banking group, and it took steep losses earlier this year in subprime mortgage investments in its hedge fund group, Dillon Read Capital Management, which ultimately led to that unit being shut down.
"Wuffli is no doubt taking the fall for the Dillon Read Capital Management debacle," said Meredith Whitney, an equity analyst at CIBC World Markets. "That was part of a succession of really negative events for the bank."
About a year ago, Marcel Ospel, the chairman of the board, proposed initiating a succession plan and nominated Wuffli, 49, who has led the bank for four years, to be his successor. The board, however, decided not to accept his proposal, UBS said in a statement on Thursday, adding "it does not view the succession of the CEO to the position of chairman as automatic."
The board also asked Ospel, 57, to serve at least another three-year term as chairman.
Wuffli, a former partner with McKinsey & Co, was named chief executive of UBS in 2003.
In recent months, the bank has struggled with a lagging stock price. Some analysts and investors attribute that to its conglomerate structure, which combines investment banking, asset management and private banking.
Wuffli had stood firmly against shearing off less profitable divisions of the bank. But internal strife and frustration inside the firm began bubbling to the surface this year when the investment bank president, Ken Moelis, announced in the spring that he was leaving the firm.
Moelis, who worked alongside the junk-bond king Michael Milken at Drexel Burnham Lambert in the 1980s, was hired in 2001 by UBS, which had struggled to gain a foothold in investment banking in the US. Moelis made headway in building its profile as an adviser on mergers and acquisitions and in raising capital for corporations but grew frustrated with the bank's unwillingness to provide financing to the fast-growing world of leveraged buyouts.
A number of investment bankers that Moelis had recruited to UBS left soon after he did, analysts said.
Meanwhile, in May, UBS shut down its hedge fund group, Dillon Read, which had been started in 2005 amid much fanfare. To build up a presence in the hedge fund industry quickly, UBS transferred many top traders from the investment bank to the hedge fund unit and seeded it with hundreds of millions of dollars of UBS capital. But earlier this year, bad bets in subprime mortgage investments led to losses of US$124 million.
UBS was the first Wall Street firm to announce heavy losses in the subprime sector, although it was not the only brokerage firm to do so. Last month, Bear Stearns said it would provide up to US$1.6 billion in secured financing to bail out one of two hedge funds run by its asset management division that had sustained substantial losses in complex loans and securities backed by subprime mortgages.
In the case of UBS, what shocked some analysts and investors was the US$300 million it cost to close Dillon Read. Of that amount, US$200 million went to severance payments and other costs for the hedge fund manager and his team.
Still, analysts expressed doubt whether the ascension of Rohner, 42, who has been the head of its wealth management group, would address mounting concerns about the investment bank.
"I don't know that this does anything to improve investor frustration with the company," Whitney said. "Now you have another wealth management guy at the top. It could be a continuation of the wealth management culture where the expenses are too high and they have not proven themselves to be good with risk."
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2