UBS has begun search for a successor to CEO Sergio Ermotti

UBS CEO Sergio Ermotti briefed executives on his plans to step down this year, people with knowledge of the matter said.
UBS CEO Sergio Ermotti briefed executives on his plans to step down this year, people with knowledge of the matter said.PHOTO: REUTERS

LONDON (BLOOMBERG) - UBS Group is searching for a successor to chief executive officer Sergio Ermotti, the latest European bank to consider changes at the top in an industry beset by sluggish growth.

UBS is formally seeking internal and external candidates after Mr Ermotti - one of Europe's longest-serving bank CEOs - briefed executives on his plans to step down this year, people with knowledge of the matter said. International wealth management co-head Iqbal Khan, a star hire who joined UBS in October from crosstown rival Credit Suisse Group, may not be among the front runners to take the top role given his relatively brief tenure, the people said.

Mr Ermotti, who has made private banking the centrepiece of UBS' strategy, brought in Mr Khan to execute the biggest revamp of the key wealth management unit in almost a decade. The lender, like many of its European peers, has dialled back its ambitions amid negative interest rates and muted client activity. Last month, Mr Ermotti cut the bank's targets for a second time in as many years against the backdrop of this outlook.

UBS has been seeking to quell questions about the bank's long-term succession plan since the departure of former star executives, including Mr Andrea Orcel. Mr Khan's arrival at UBS and the elevation of other top executives had been seen as taking some pressure off Ermotti to show a strong bench of internal candidates.

The CEO, who is in his ninth year in the job, is part of a Europe-wide trend of bank executives getting ready to hand over the reins to the next generation. Lenders, including Societe Generale and HSBC Holdings, are among those also looking for replacements. Credit Suisse just replaced its CEO, though in the aftermath of a spying scandal.

A UBS spokesman said the bank declined to comment on succession.

Mr Ermotti undertook a radical overhaul of the top ranks in August. After a year marred by huge legal fines, questions about succession and a deepening slump in share prices, he replaced wealth management co-head Martin Blessing with Mr Khan, elevating Ms Suni Harford to take over asset management and Ms Sabine Keller-Busse as the Europe, Middle East and Africa president.

The lender is weighing changes at the top of the organisation after a major overhaul at its biggest competitor, Credit Suisse, following a spying scandal that tainted the bank and caused the ouster of CEO Tidjane Thiam. The executive was in charge for a tumultuous four and a half years, about half Mr Ermotti's tenure.

 
 
 

UBS chairman Axel Weber said last month that succession was not at the forefront of his concerns and that his top priority is working to reduce the $5 billion tax fine that's prompted the bank to postpone a decision on future share buybacks until the second half. The bank received the fine after a Paris court found it guilty of helping wealthy French clients stash undeclared funds in Swiss accounts.

The topic of succession at the Swiss wealth manager was forced out into the open a year ago when Mr Weber said in a Bloomberg Television interview that he and Mr Ermotti were in their eighth year at the bank, "a point in time where you need to start thinking about what is it you're going to do and how you're going to pass the bank over to your successors". That was interpreted by some as being a sign that he was starting considering who might replace Mr Ermotti.