UBS appoints Grübel as new CEO in shock move

Oswald Grübel, left, replaces CEO of the past two years, Marcel Rohner Keystone

Switzerland's largest bank, UBS, has appointed a new group chief executive officer to help it weather the global financial crisis.

Oswald Grübel – former head of the country’s other major bank, Credit Suisse – has taken over from Marcel Rohner with immediate effect, UBS announced in a sudden move on Thursday.

The news sent the UBS share price climbing by 15 per cent to SFr11.60 ($9.91) at the opening of Thursday’s trading on the bourse.

Rohner, who has resigned, told the bank’s board of directors in January about his intention to step down after restructuring moves. He was in the post for less than two years.

Peter Kurer, the bank’s chairman, said he would not step down.

Grübel’s broad experience in introducing profitable changes at Credit Suisse would prove invaluable and his appointment was a further attempt to restore confidence in UBS, a statement from the bank said.

“With his previous employer Credit Suisse, Mr Grübel was the architect of a successful turnaround and restored confidence in the company in turbulent times,” it went on.

“Oswald Grübel’s broad experience in the banking sector, and in leading a financial services company through transformation, will be invaluable to UBS in this challenging environment.”

Grübel, a 66-year-old German, worked for CS for nearly 40 years and served as CEO from 2004-2007.

CS posted SFr3 billion in losses in 2002, but under Grübel’s reign turned a profit of SFr11 billion in 2006.

He retired two years ago from the bank after restructuring at the CS Group.

UBS chairman Peter Kurer said Grübel brought “indisputable leadership qualities, combined with his extensive expertise”.

“He will also be adept in balancing our focus on prudent risk-taking and client confidence, and our goal to position UBS for future success.”

“Formidable challenge”

UBS paid tribute to Rohner in its statement.

“During his career at UBS, and especially since his appointment as group CEO, Marcel Rohner has shown a tremendous commitment to our clients, shareholders and employees. We are extremely grateful for his contributions.”

UBS made a loss of almost SFr20 billion last year, mainly due to continuing problems at its investment bank. The bank recently announced that it would cut some 2,700 jobs, on top of 6,000 positions already shed since the third quarter of 2007.

It is now benefitting from a state bailout plan to the tune of more than SFr60 million.

It is also facing legal pressures in the United States over allegations it has helped wealthy Americans evade US taxes.

Grübel vowed to do all he could to bring UBS back on a profitable, successful track.

“The opportunity to lead UBS with its unique client franchise in wealth management, investment banking and asset management in these extraordinary times presents a fascinating, yet formidable challenge to me,” he said on Thursday.

“I will remain head of the group until the work is done.”

He sent an email to UBS employees on Thursday morning stating that the bank’s main objective was restoring the confidence of customers and other stakeholders.

He warned them that “substantial cost reductions” were unavoidable and said the bank had to stick strictly to international banking legislation in order to protect its reputation.

No Superman

The finance ministry responded on Thursday saying the appointment sent a “positive signal” that would help rebuild trust in the bank and contribute towards its stabilisation.

Switzerland’s political parties reacted warmly to the change, saying it did not surprise them.

The Swiss People’s Party said the move was a sign of UBS’s commitment to strengthening the position of Swiss banks. The Radical Party president said UBS had found a highly qualified and experienced leader who possessed “indispensable calm”.

Market analysts have been positive about the change at the top of UBS but they also point out that Grübel will not have an easy job.

“Grübel isn’t Superman and a turnaround is still difficult,” commented Bank of America analysts Derek de Vries and Britta Schmidt.

“Despite our positive reaction to Mr Grübel’s appointment, UBS faces a difficult task. The attacks on private banking secrecy represent a real risk to UBS shareholders.”

Dirk Becker at Kelper Capital Markets defended Rohner’s record, saying he could “hardly be blamed”.

But he pointed out that under his leadership, UBS had six consecutive loss-making quarters with around SFr30 billion in losses and three large capital increases, including a government-sponsored injection.

swissinfo with agencies

Key facts

UBS financial figures 2008: Operating income at the end of 2008: SFr1.545 billion (SFr31.721 billion in 2007)
Net loss: SFr19.697 billion (SFr5.247 billion in 2007)
Staff: 77,783 (83,560 at the end of 2007)
A shareholder dividend has not been proposed for 2008.

Oswald Grübel

Born in East Germany in 1943, Grübel, 66, played a key role in turning Credit Suisse around after it posted a SFr3 billion annual loss in 2002. His policies were strongly criticised by his predecessor, Lukas Mühlemann, but Grübel led the bank to an SFr11 billion profit in 2006. But there were costs: thousands of employees lost their jobs.

Nicknamed “Ossie” by his close friends, Grübel was an orphan. He began his banking career at Deutsche Bank, and moved to CS in 1970 by working for its investment offices in London, White Weld Securities. He became the CEO of that division in 1978.

Grübel continued to climb the corporate ladder by taking several high positions within the bank, namely at Credit Suisse First Boston. In 1991 he joined the executive board. In 1998 he began serving as director of the bank’s private division and later at Credit Suisse Financial Services. After leaving briefly in 2001, he became the bank’s co-CEO and later assumed the helm in 2004. He stepped down in 2007.

UBS STRUCTURAL CHANGES

The bank has created two new business divisions: Wealth Management & Swiss Bank, and Wealth Management Americas.

UBS said the new structure refocused UBS on its core businesses, on the large scale and strengths of its wealth management franchise in Switzerland, and on the growth potential of its onshore business globally.