UBS may be less inclined to chase trends in investment banking after a string of setbacks led to the abrupt ouster of CEO Peter Wuffli.
"They'll be more careful about building up a group very quickly," says an external recruiter who has helped the Swiss-based financial services giant hire investment bankers in the U.S.
Wuffli's successor, Marcel Rohner, headed global wealth management and business banking, and has been deputy CEO of the firm since January 2006. Raoul Weil, head of international wealth management, succeeds Rohner as chairman and CEO of global wealth management and business banking.
The very public changing of the guard unmistakably shifts power away from UBS' New York and London investment banking operations and back toward the wealth management business based in Zurich.
The company denied speculation that it might exit investment banking altogether to concentrate on private banking and wealth management, areas where it's enjoyed consistent profit growth and is the world market-share leader. "We will continue to pursue UBS's current strategic course, acting as one firm with a focus on organic growth," Chairman Marcel Ospel wrote in a memo to staff which was quoted in The Wall Street Journal.
Nevertheless, a U.S.-based external recruiter predicts that UBS' aggressive expansion into investment banking will trail off for awhile. And if global M&A activity rolls over, the Swiss bank may retrench more than other top-tier institutions. "On a downturn, the investment banking business becomes very expensive" to maintain, he notes. "If a place like UBS is not really behind it, their headcount will fall a lot more than everybody else."
The big push into investment banking took place under Wuffli's watch, which began in 2001. His dismissal follows a number of missteps this year, including the departure of investment banking co-heads Ken Moelis and Jeffrey McDermott and poor performance at hedge fund unit Dillon Read, which UBS decided to shut down after a first-quarter loss.