UBS AG (UBSN) plans to appoint Axel Weber as chairman, easing concern over succession at Switzerland’s largest bank and ending speculation the former Bundesbank president might take a top post at Deutsche Bank AG. (DBK)
Weber, 54, will be nominated to the board of directors at the next shareholders meeting on May 3, 2012, the Zurich-based bank said in a statement today. If elected, the board plans to appoint Weber as vice chairman next year, and as chairman, to succeed Kaspar Villiger, in 2013.
“With Axel Weber’s nomination, I am pleased that I can present a board member and future chairman who is an internationally renowned personality with an outstanding reputation,” Villiger, 70, said in the statement. “He has extremely broad expertise in international finance and banking as well as strong leadership experience.”
Weber was a frontrunner to succeed Jean-Claude Trichet as president of the European Central Bank until he announced his departure from the Bundesbank in February. He was also considered a potential candidate to succeed Deutsche Bank Chief Executive Officer Josef Ackermann, people with knowledge of the matter said in May. UBS has been looking for successors for its top posts after bringing Villiger, a former Swiss finance minister, and CEO Oswald Gruebel, 67, out of retirement in 2009 to rebuild the bank following the biggest loss in Swiss corporate history.
“From a top-down perspective, it’s clearly very positive,” said Kian Abouhossein, a London-based analyst at JPMorgan Chase & Co. “His contacts within Europe and globally will be very useful to UBS. And in a very fast changing regulatory environment he’ll be a great asset to have within the firm.”
UBS rose 15 centimes, or 1 percent, to 15.48 francs by 12:08 p.m. in Swiss trading, leaving the stock up 0.9 percent this year. That compares with a 4 percent decline in the 49- company Bloomberg Europe Banks and Financial Services Index.
Weber, a German national, was the president of the Bundesbank from April 2004 to April 2011 and a member of the ECB’s Governing Council. In his role at the Bundesbank, he also served as a member of the board of directors of the Bank for International Settlements, German governor of the International Monetary Fund, a member of the steering committees of the European Systemic Risk Board and Financial Stability Board. Prior to that, he was a professor of economic theory and international economics, teaching at various German universities.
“Being able to help shape the bank’s future is an attractive prospect,” Weber said in the statement. “Stability and a long-term strategic outlook are key. The successful path that has already been forged, the strong global client base and the balanced business model provide a good basis.”
Weber asked the Bundesbank for permission to join UBS, as is required under his contract, and the request will be considered at a meeting on July 12, the Frankfurt-based central bank said in a statement today.
UBS aims to double its pretax earnings from last year to about 15 billion Swiss francs ($17.8 billion) by 2014, a target that has been questioned by analysts as stricter capital requirements constrain profit growth at the investment-banking unit.
“The pressure is mounting on UBS,” said Abouhossein, who has an “overweight” rating on the company. “If they don’t cut their target this year, the pressure on management will be even bigger.”
Gruebel has said that UBS may review its targets in the light of new regulatory requirements around the world. Asked in March whether after two years into his post there are at least another two years in front of him as CEO, Gruebel told Swiss magazine Bilanz “It looks like that at the moment.”
UBS overhauled the responsibilities of its board and management in 2008 after criticism from shareholders, including the bank’s former president, Luqman Arnold, who blamed the “ineffective corporate governance and insular culture” for risk failures that led to the second-biggest writedowns and losses from the credit crisis among European lenders.
The bank abolished the three-person chairman’s office, a creation of Marcel Ospel that held ultimate responsibility for risk, and spread its responsibilities among committees on the board. The chairman is supposed to keep a “close working relationship” with the CEO and other executives, providing advice and support while “respecting the fact that day-to-day management responsibility is delegated to the group executive board,” UBS’s new organization regulations say.
UBS will pay Weber 2 million francs and give him 200,000 shares that he’s prohibited from selling for one year if he’s elected to the board. He will also receive an annual salary of 1.5 million francs and 150,000 UBS shares, blocked for four years, in the vice chairman position. His annual compensation will rise to 2 million francs and 200,000 blocked shares if he becomes chairman.
The bank, which paid 26.6 million francs in total compensation to then-chairman Ospel for 2006, scrapped bonuses for the chairman as part of a pay system revamp introduced in 2009 after the bank was rescued by the state.
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