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UBS rules out external successor to President Sergio Ermotti
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UBS has ruled out an outsider as successor to Chief Executive Sergio Ermotti, planning instead to choose from a slate of three internal candidates when he steps down in about three years.
The Swiss bank could signal the identities of potential successors as early as next year’s annual meeting, according to people with knowledge of the plans, having decided not to look outside the group for a future leader.
Candidates, who are expected to come from the current executive board, would then be given additional responsibilities or changes to their roles in order to broaden their experience before being able to replace Ermotti.
“It’s about giving them a greater reach,” said one person with knowledge of the plans. “They will need time to prove themselves.”
Ermotti returned to UBS as chief executive just over a year ago, just days after the bank rescued its arch-rival Credit Suisse in a forced marriage arranged by Swiss authorities.
At the time, the 64-year-old former investment banker committed to spending three to five years in the role, according to people briefed on the deal, in order to oversee the three-year integration of Credit Suisse and develop a growth strategy for the combined group. Ermotti was also tasked with nurturing a group of successors.
President of UBS, Colm Kelleher fired the starter pistol about the succession race last year, when he said the bank was looking to follow the example set by his former employer, Morgan Stanley, at the Financial Times Banking Summit.
Morgan Stanley had multiple internal candidates choose when longtime chief executive James Gorman stepped down last year. They finally chose Ted Pick. Gorman announced on Thursday that he would step down as president at the end of 2024.
But UBS’s organizational structure is different from Morgan Stanley’s, which allowed Pick and another candidate, Andy Saperstein, to share responsibility for much of the group in co-chair roles.
At UBS, division heads sit on the group executive board and report directly to the chief executive. To better prepare potential successors, the UBS board considered adjusting the structure or changing the roles of executives, according to people briefed on the discussions.
While no final decision has been made on who would make the list, Iqbal Khan, head of wealth management – the most important division at UBS – is expected to be included.
Rob Karofsky, head of investment banking, is seen as another potential candidate, as is Bea Martin, who oversees the non-core, legacy UBS unit responsible for divesting and liquidating parts of Credit Suisse that are considered undesirable. She recently received additional sustainability oversight.
Sabine Keller-Busse, who heads UBS’s Swiss business, is also seen as a potential candidate.
Although succession plans have been drawn up by the UBS board of directors, the management team is concerned about the integration of the two businesses, including the merger of the legal entities by the end of May.
Ermotti is also focused on dealing with Swiss authorities over new rules that could include additional capital requirements at UBS, which the bank is lobbying against.
UBS declined to comment.