UBS reshuffle continues as chairman resigns

Villiger (left) will take over serious challenges from Kurer swissinfo.ch

Embattled bank UBS has announced another change at the top with chairman Peter Kurer stepping down in favour of former Swiss cabinet minister Kaspar Villiger.

The latest development comes a week after Switzerland’s largest bank replaced its chief executive. Kurer will end his one-year tenure in April, with Villiger nominated to take over his post.

UBS has endured a torrid two years amid the financial crisis – losing two chairmen, two chief executives, 80 per cent of its share price and billions of francs in writedowns in that time. UBS recently announced a record SFr20 billion ($17 billion) trading loss in 2008.

Last month, the bank was also forced to pay $780 million in fines and hand over confidential client information to the United States as a result of an ongoing tax evasion investigation.

Bank Sarasin analyst Rainer Skierka believes Villiger’s political and diplomatic experience was a key factor in his appointment. Villiger negotiated with the US authorities over dormant Holocaust era bank accounts and brokered a deal with the European Union on withholding tax during his reign as Swiss finance minister.

UBS is still faced with unrelenting pressure from the US to hand over more confidential client data. “This is one of the highest priorities of the bank to get solved because without any solution to political-economic issues it cannot get back on course,” Skierka told swissinfo.

Guilt by association

Flagging UBS shares were boosted by the news of Villiger’s appointment, rising more than 10 per cent by mid-afternoon. Share prices were similarly buoyed last week by the news that former Credit Suisse chief executive Oswald Grübel was taking over from Marcel Rohner as UBS CEO.

“It’s clear that this mix of tactical business leadership [Grübel] together with political experience [Villiger] is a plus for the bank,” said Skierka.

Kurer was voted in as chairman last April following the resignation of Marcel Ospel, who took a large part of the blame for the bank’s failings. Many observers saw the former UBS chief counsel as a stop-gap solution until a permanent successor could be found.

“The old chairman and CEO were always seen as somehow involved in the dark past of UBS so there was enormous pressure to make a clean sheet approach,” Skierka told swissinfo.

UBS vice-chairman Sergio Marchionne paid tribute to Kurer, who had reformed the bank’s leadership structure, curbed bonuses, introduced more robust risk controls and reviewed strategy during his year in office.

“With humility and courage, he accepted this engagement out of a sense of duty and service to the institution. He has worked tirelessly to accomplish all the objectives he had set for himself and for the bank at the beginning of his tenure,” Marchionne said in a statement.

Mixed reaction

Villiger, who held the rotating Swiss presidency twice during his ministerial reign, will be proposed as Kurer’s replacement at the bank’s annual general meeting of shareholders on April 15.

“I believe these to be exceptional times for UBS and Switzerland, and I recognize the difficulties that still lie ahead. This is precisely why I have accepted to chair the Board of UBS, out of a sense of service to this country and its people,” Villiger said in a statement.

“We need to respond to the current challenges by relying on our core values of integrity, hard work and reliability,” he added.

There was a mixed reaction from political parties to the proposed appointment of Villiger. Two of the main parties welcomed the change but the rightwing People’s Party questioned the former politician and industrialist’s lack of banking experience.

Ueli Leuenberger, head of the Green party, issued a warning that Villiger must tackle the thorny issue of banking secrecy – something the left wing party opposes. “If Villiger is ready to discuss banking secrecy then we will support him. If not, then we will fight him,” Leuenberger said.

But Villiger told the media on Wednesday that while banking secrecy may have to evolve, it was here to stay.

The Swiss Business Federation, economiesuisse, said it supported Villiger’s nomination.

swissinfo, Matthew Allen

UBS on the ropes

UBS’s dramatic fall from grace started in July 2007, when chief executive Peter Wuffli stepped down following the collapse of the bank’s hedge fund Dillon Read Capital Management.

In October 2007, UBS said it would cut 1,500 jobs in its investment banking arm, including that of its head, Huw Jenkins. Chief Financial Officer Clive Standish left at the same time. Chairman Marcel Ospel stepped down in April 2008.

In October last year, the Swiss National Bank (SNB) was forced to inject SFr6 billion ($5.29 billion) into UBS. A facility was also set up to allow the bank to bin up to $60 billion of toxic assets.

This bailout did not prevent the bank from posting a SFr20 billion loss for 2008. Wealthy clients pulled out $58 billion from the bank in the last quarter alone.

UBS has also been haunted by a US investigation that accused the bank of helping wealthy Americans illegally evade $200 billion in taxes. Last week, it was forced to pay $780 million in fines and hand over some confidential client data.

Last month, UBS chief executive Marcel Rohner announced he would step down, to be replaced by former Credit Suisse CEO Oswald Grübel.

Kaspar Villiger

Kaspar Villiger was born on February 5, 1941 into a manufacturing family, which produced cigars and bicycles.

After studying engineering at Zurich’s Federal Institute of Technology, he joined the family firm, Villiger and Sons, which he managed together with his brother Heinrich.

He entered local politics in 1972 in the cantonal parliament of Lucerne. Ten years later, Villiger entered the federal House of Representatives and moved onto the Senate in 1987.

In 1989 he was named defence minister and switched to finance minister in 1985, a position he held until 2003. He held the rotating Swiss presidency in 1995 and 2002.

After leaving politics, Villiger joined the boards of Nestlé, Swiss Re and the Zurich newspaper NZZ. He will stand down from these posts if elected to UBS. His annual salary would be SFr850,000.

swissinfo.ch