Swiss banks have rediscovered their knack for boardroom coups. They appeared to have lost their appetite for ousters when Credit Suisse (CS) staged a smooth changing of the guard earlier this year. UBS chief executive Peter Wuffli hasn’t been so lucky. He’s lost his job at a moment’s notice, in the tradition of his predecessor Luqman Arnold and former CS bosses such as Lukas Muehlemann and John Mack.
But why? UBS’ official explanation hardly seems to tell the whole story. It’s not obvious that Wuffli’s departure will do much to “institute generational change”. At 48, he’s only six years older than his successor, Marcel Rohner. Nor will it do much for the group’s corporate governance. Sure, ruling out the automatic promotion of chief executive to chairman looks a step forward. But another abrupt ouster looks a big step back.
Where Wuffli, an asset management guy, did slip up was in his handling of UBS’ investment bank. It’s still too early to judge whether the group’s caution in leveraged finance, which has cost UBS growth and some of its more ambitious personnel, will prove mistaken.
But his bet on an internal hedge fund, Dillon Read Capital Management (DRCM), certainly has. UBS couldn’t make DRCM work despite a fair wind in financial markets and a roster of star bankers. That’s dented UBS’ reputation, even if it didn’t leave a huge hole in the group’s finances.
It has helped put the brakes on UBS’ shares too. After outperforming their European peers for most of Wuffli’s reign, they’ve fallen behind in the last year. What’s more, the group has lost some of its premium over rival Credit Suisse too. UBS’ bigwigs may have found that particularly hard to swallow.
Wuffli’s exit has handed his deputy, Marcel Rohner, the chief executive spot. But Marcel Ospel, the UBS chairman, may be the biggest winner of the shake-up. True, the board rejected his request that Wuffli should succeed him. But Ospel has got quite a consolation prize—the board has asked him to stay on for at least another three years. With no obvious successor from inside the group, Ospel looks to have strengthened his grip.